Is your head spinning with questions about foreclosures? I’ve had three clients ask me how the foreclosure process will affect real estate sales in Washington State. I’m not sure anyone can answer that question completely right now. This week I heard an NPR news story about mortgage backed securities now asking banks take back certain loans.
I’m not going to attempt to answer all of the questions about foreclosures, since as I’ve said, I don’t believe anyone knows how this will all shake out. However, I am going to talk about what’s happening in Washington State. Attorney General Rob McKenna made a statement as to what his office is doing regarding the foreclosure questions.
One important point to note:
- The focus of Atty General McKenna’s communication to trustees and servicers is directed at pending and future foreclosures.
The Washington Association of Realtors commented on Attorney McKenna’s foreclosure news:
….it is important to understand that buyers who have already closed the purchase of a home with title insurance, even if the home was foreclosed, are not at risk. The AG’s announcement does not undermine those buyers who purchased property and insured title. There is no reason to assume there were defects in a foreclosure process that is already concluded, but if a defect were revealed, the buyer will be protected by buyer’s title insurance.
Similarly, the Attorney General is not asking lenders with REO properties listed for sale or pending closing to stop the sale of those properties. Properties that have already been foreclosed are not affected by the Attorney General’s announcement. There is no reason to believe, based on these announcements, that already-foreclosed properties cannot be sold with clear and insurable title.
All Washington homeowners and REALTORS will benefit from a directive requiring lenders to adhere to Washington law during the foreclosure process. As we (The Washington Association of Realtors) have stated repeatedly in the last two weeks, there is nothing fundamentally broken in Washington’s foreclosure law. To the contrary, the law is good and the Attorney General is insuring that it is obeyed by foreclosing lenders.
Regardless, the foreclosure news puts some fear back into the real estate marketplace. It’s more fear of the unknown here that seems to be the issue. If it were more clear as to how this will impact real estate, it would help to calm the fear of the unknown, which seems to rule right now.
So, in answer to my question that’s the title of this post, I can’t give a definitive answer yet. This news, coupled with the time of year, and the upcoming election, are all issues impacting the real estate market and contributing to home buyers moving more slowly.
What do you think about the latest wrinkle in real estate with the foreclosure question?