Bank Of America's Foreclosure Freeze Stuck Me In Limbo

The Bank of America foreclosure freeze doesn’t work out so well for those who were about to buy a foreclosed property. Andy finds himself spinning his wheels, having been zapped by the freeze ray just as he was about to close on a house.

He writes:

I am trying to understand what impact the Bank Of America “freeze” has had on other people. I am stuck in limbo and at their mercy. I have signed contract, but I cannot close and not one knows when I will be able to close.

There are twists and updates every 10 minutes. I get calls from the listing agent saying we can close ASAp, then 10 minutes later my Realtor calls saying “No REO closings till further notice’, then I get equator emails forwarded to me from the asset managers like this one”

The foreclosure sale date for this asset was 02/06/2009; the foreclosure sale stands and our current transaction scheduled to close on 10/12/2010 should be honored by all parties. This transaction is not affected by the recent efforts by Bank of America to review foreclosure sale processes. Only assets with a foreclosure sale date on or after 10/09/2010 are affected by the delay.


I just want one, definitive answer so I can sleep at night.

Unfortunately, it doesn’t look like there is one definitive answer — and that’s the problem.

In fact, cases like yours show why a national moratorium on foreclosures is controversial and currently not supported by the White House.

Consumers Union, parent company of Consumerist, supports a nationwide moratorium.

Here’s The Atlantic’s take on the situation. So, long story short — we’re on the precipice of a clusterf*ck and there are no simple answers.

Previously: Bank Of America Puts Nationwide Freeze On Foreclosure Sales

Comments

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  1. mexifelio says:

    Start looking for another house.
    I know that sounds harsh, but you could be looking at months and months away from a closing, or even worse – waiting all that time just to be told you cannot buy the house and it goes back onto the market to restart its sale processes.
    I’ve seen this happen with many short sales :(

    • Ce J says:

      Agreed. There is a great supply of houses on the market right now and the price is right. Pick one without this cloud looming over it. You’ll be in a new house in no time.

    • ReverendLoki says:

      Good idea, except it sounds like he may be contractually obligated to buy this house. He buys a house he can move into now, and next week this sale is allowed to proceed, he may find himself owning an extra house. And now he’s trying to sell a house in this market…

      • mexifelio says:

        He/she is free once the Close of Escrow date on the fully executed contract comes and goes. In the case of a short sale or foreclosure this date may have already passed.
        Plus there is no chance of them owning the house unless he’s signed his closing documents (which it appears has not yet happened).

  2. snowmentality says:

    Thanks, BoA, for totally screwing up everyone. Heckuva job.

  3. keepher says:

    Do you really want to go through with it when a month or so down the line it could be found the documentation for foreclosure was fraudulent? Were you even able to get title insurance considering one of the largest title insurers is not writing policies on new mortgages for foreclosed properties?

    If you didn’t get title insurance this is the time to do it because if all the i’s weren’t dotted and t’s not crossed you could be out on the street and out thousands of dollars.

  4. dennis says:

    They foreclosed on houses incorrectly. Would you like to loose your house improperly?

    • common_sense84 says:

      These houses are being foreclosed no matter what. All the current hoopla concerns is them making the process cheaper by having one notary notarize thousands of documents in a single month.

      There is no way for people to get their houses back. This freeze will cost the banks money and screw over anyone trying to buy a home.

      Personally I think the better solution is for homeowners to form class actions against the banks and just get as much money they can out of them.

      • SkullCowboy says:

        “All the current hoopla concerns is them making the process cheaper by having one notary notarize thousands of documents in a single month.”

        And, in essence, lying about whether the documentation, most importantly the actual loan note, had been verified as legal and proper. And then using that verification to get the courts to rubberstamp the foreclosure. The current ‘hoopla’, as you put it, is really about finding out that thousands upon thousands of the ‘verified’ documents were forgeries or worse, NEVER EXISTED.

  5. digikata says:

    If the seller cannot deliver a clean title to the property, then you really don’t want to purchase the house. Furthermore, if bank can’t deliver a clean title within a timely manner, then that’s the basis to walk away from the transaction.

  6. ninabi says:

    It’s a shame Andy can’t close on his house but the mortgage crisis has created a monster.

    We just closed on our (new) home in August and we were told the lender would like sell the loan.

    I just received our 4th letter yesterday announcing the 4th lender who now owns the mortgage. Scary as hell- who is getting the checks. Heck, I can’t even set up autopay with lender roulette going at this pace.

    • wickedpixel says:

      Can you set up your mortgage to pay into an escrow account instead? That way you’re always sending your payment to the same place regardless of who holds the mortgage this week.

    • One-Eyed Jack says:

      That’s NUTS. I’m only now realizing what a mess this has become. We paid off the house 18 months ago so we’re not quite “hip” to the current mortgage process. We are very fortunate that the mortgage we got in 1993 stayed local the entire life of the loan. All I have to say is, “Bless your heart.” And good lord, someone fix this mess!!

  7. wickedpixel says:

    I’m actually in the opposite situation – benefiting from the foreclosure freeze. I’m buying a short sale that’s been hanging in limbo for months because BofA couldn’t decide if they wanted to approve the short sale or foreclose. Now with the freeze they’ve approved the short sale and I can finally close on the house.

  8. Gizmosmonster says:

    They dragged my br-in-law through the same thing. He was able to pay cash for the property. He made an offer in December 2009, and closed last Thursday, right before this announcement came through. Over the course of this he had to deal with seven different people rotating through the job that had to sign off on the sale. He lost out on the 8k tax credit, and was in limbo right up until the day they closed.
    This was for a CASH sale. He wanted to give them money for a broken down piece of junk property in a crime ridden neighborhood.

  9. c!tizen says:

    Silly OP, there’s no sleeping when buying a house.

  10. whittygirl says:

    My husband and I just bought a house, and when we were looking our agent told us up front that unless we had unlimited time she would not be researching short sales for us (but we were free to do so). Her experience with the banks actually closing on those sales were so bad that she said it was taking easily 9 months or more once everything was done, not to mention months to get an accepted offer (which the banks can rescind seemingly at will). Of course we found a few ourselves that we asked her to show us, but most of them were in such bad shape that we opted not to mess with it. One owner had changed all of the locks so we couldn’t get in for the showing, and frankly it just felt vulture-like. Inventory in our area is unbelievably large–the first targeted list we weeded through had over 200 homes in it *without* short sales or bank owneds.

    Apparently once the home is bank owned it’s faster, but still takes longer than a traditional sale. It’s ugly on both sides of this mess.

    • Karita says:

      I can confirm that short sales are not going through – I’m an attorney with about 12 of them going on right now, and some have been in the system for over a year now. I have not closed one in months. The banks do not seem willing to negotiate anymore. (Nor are they modifying mortgages which is another issue…)

      Right now, I’m also advising clients to avoid foreclosed properties. There is no way to tell what is going to happen with them, and the title issues could get messy.

  11. baconsnake says:

    I’m trying to understand the same thing. I have a friend in the exact same situation, but here’s the thing.

    The bank (really the loan’s servicer) will not market a property until they have completed the Foreclosure process. Once they have completed FC, they should have clear title and should not have any closing delay.

  12. Sian says:

    Waiting on the bank on a shortsale myself, other party accepted the offer now just waiting on the mortgage lender.. hrm.

  13. mary0466 says:

    I have been under contract, on a short sale, since January 9, 2010, with BOA..
    We have been back and forth, and still have no idea when closing will happen, if ever.
    I don’t think BOA, cares what they are putting people through, or their families.
    There just has to be a better way..We are holding out till the end of the year,to see if
    by the grace of god, we make it to settlement, if not I’m done, and will walk away, with a total loss of almost 10 thousand.