San Diego real estate circles are abuzz with discussion about Bank of America’s (and others) foreclosure halt. The general consensus is that those buyers who acquired foreclosures and have already closed on them will likely be safe, especially if title insurance was in place.
In jeopardy are those transactions in escrow or those in preparation stage for market entry.
So who potentially benefits from the foreclosure freeze–and who is at risk?
Potential Winners:
1. San Diego short sales. Here is an opportunity for banks to transfer clear title because the owner signs off on the sale voluntarily. If they are smart, Bank of America and others will expedite short sales and remove future foreclosures from the liability pool.
2.Those borrowers who are trying to obtain loan modifications can now breathe a sigh of relief. This just might allow more homeowners to keep their homes and prevent further neighborhood blight and decay in home values.
3. Those home sellers who have equity in their real estate and can negotiate directly without bank intervention. Savvy buyers might be willing to pay a small premium for great peace of mind in knowing there are no issues clouding title to the home they are buying.
Potential Losers:
1. Buyers who have a foreclosure transaction in escrow with one of the lenders who have halted those sales. Should they stay on course or move on to a more reliable deal?
2. The Foreclosure Industry including foreclosure real estate agents, foreclosure repair and service companies, foreclosure attorneys, title companies, escrow companies that exclusively service foreclosures, and other professions that serve the foreclosure industry.
3. Homeowner Associations. If foreclosures are halted and HOA fees remain in default with defaulted homes (as is often the case), the association may be forced to increase fees to cover neighborhood landscape maintenance, pools and other services.
This is a situation we are all watching closely–and welcome updates and comments.
FYI a Real Estate Glossary