So you purchase a foreclosed home (or bank REO), and you’re probably wondering what, if anything, could happen? Will the property go back to the seller who was (possibly) wrongfully foreclosed upon? My crystal ball is in the shop, but my guess is probably not.
The first thing I would like to ask you is “Did you purchase title insurance”? This is where that pesky fee finally comes into play. As long as you have title insurance, then the title insurance company is going to have to fight the battle for you. The Associated Press explains the situation very well in this article: So you bought a foreclosed home. Now what?
Here’s what I’m thinking…if, in fact, there are thousands of homes which were wrongfully foreclosed on, it is going to take years to straighten all the paperwork out. The seller was behind and would have been foreclosed on anyway. I’m not saying lenders/banks should get away with doing things incorrectly. What I’m saying is that the seller was in default and would have gotten further and further behind, the longer it took to cure (or fix) any title issues. There is no way they would have ever gotten current with their mortgage., hence they would have been foreclosed on anyway. The longer it would have taken to foreclose, the longer the owner would have lived for free.
Let me know what you think.