No doubt you have heard or read quite a bit about foreclosures lately: banks are being sued, foreclosures are being stopped, title companies declining to write policies on bank owned properties, loan servicers and their procedures are being investigated, the list goes on.
What’s really going on, and how does it effect you? The majority of these stories, while they may have credence on the national market, don’t really apply to California. This has become such an issue that CAR (California Association of Realtors®) has released an article to help alleviate the confusion.
In large, California is excluded from these storiesbecause our foreclosure and title processes are different from the effected states. In most cases our process is called non-judicial, meaning that court appearances are not required. While your Realtor® may be able to explain this in more detail, please remember that we are not attorneys. If you want a full understanding contact your real estate attorney.
Highlights from the CAR release include:
- In 23 states (not California) banks have voluntarily halted foreclosure proceedings until they review their procedures.
- To date, only Bank of America has stopped foreclosures in California.
- Lenders and servicers that have temporarily stopped processing foreclosures in the 23 states include: Goldman Sachs Group Incs Litton Loan Servicing, Ally Financial Inc.s GMAC Mortgage unit, JPMorgan Chase, and PNC Financial.
- Neither state nor federal mandates are forcing this, it is voluntary.
- Some Realtors® have reported transaction delays, delays in escrow and the removal of foreclosed properties from listings (pulled from the market).
- The immediate impact on home sales might be a slowing of sales, and the long term will depend on the speed with which this is resolved. If the moratoriums are lifted next month, the flow of REOs (bank (or Real Estate) owned properties) should resume.
- Freddie Mac & Fannie Mae and the Office of the Controller of the Currency have asked lenders to review their processes. This includes California and other states where the vast majority of foreclosures are non-judicial.
- The participating lenders and servicers expect the reviews to take “a few weeks to 30 days to complete”.
in our opinion, this should have little impact on sales or prices in the Yuba-Sutter region. While Bank of America’s actions are going to be felt here, we think that buyers’ perception will be the biggest market changer. If most buyers understand that in California the foreclosure market will continue pretty much as it has, the impact will be minimal.