New Orleans Foreclosures
It’s been all over the news – states that have a judicial foreclosure process (and Louisiana is one of them) are seeing some of the major mortgage holders halt foreclosures AND sales of properties they have already foreclosed on. How does this impact you if you are currently in the market to buy a New Orleans home?
In Louisiana, the lender has to file suit against delinquent home owners in order to foreclose on the property held as collateral. Part of the process is verifying they have all of the documents necessary to prove to the court that they have the right to do so. Unfortunately, some of the lenders were churning out thousands of “reviews” each day without actually doing the work. The end result is that some major title insurance companies are refusing to issue title insurance on these types of properties because of the risk of the original owner filing suit (due to the sloppy work done by the banks) and regaining possession of the property. It’s an ugly can of worms that at the end can have a devastating impact on people’s lives.
What’s Happening to Our Market?
I was talking to another local agent yesterday who has a large number of foreclosures listed. He told me that the banks he is working with want to keep the houses on the market, but are not going to make any decisions on offers until they are sure that a clear title can be passed to a buyer. Common sense says that they should have been sure of this before ever listing the property, but since the entire process is mucked up, sales have ground to a halt and there is no date for when they might resume.
Choosing to make an offer on a foreclosure at this point may be akin to making an offer on a short sale. You don’t really know how long it will be before you get an answer from the bank. If the freeze on foreclosure sales lasts more than a few weeks, you could be pushing your home purchase into next year rather than enjoying the holidays in your new house.
Additionally, with all of the news coverage, you can bet that there are going to be some disgruntled folks who lost their home that are going to file suit to try to regain it. Even if they lose the suit, is the stress and hassle factor worth it?
If I was buying a house right now, I would stick to a traditional, non-bank seller. This is just my personal opinion. There are, I’m sure, people who would disagree with me. Why? It’s a known. There is not the risk of a home owner sitting back and collecting offers, yet not making a decision. Banks don’t play by the same rules that individuals do – perhaps that’s what got them in some of this mess.
In a traditional resale, you have a pretty good idea what will happen through the purchase process. Right now, we can’t say the same for foreclosures.