October 12, 2010

Legal Q & A

On Friday, however, Bank of America suspended the sale of its foreclosed home inventory in all 50 states. Has anything changed?

Answer:
Based on Bank of America's statement, the bank has postponed the sale of its real estate inventory. acquired through foreclosure, in all 50 states. Bank of America's policy seems to be an "across the board" policy without characterization of defective processes in any particular state. There is no reason to believe that homes foreclosed in Washington cannot be resold to third party buyers with clear title. Bank of America's reaction is sweeping and does not account for the foreclosure process in Washington state.

With that said, there was a case decided by one of our state's appellate courts at the very end of September, that resulted in the overturning of a foreclosure sale, on the courthouse steps, to a buyer (not the bank). In that sale, there were procedural defects in the bank's handling of the foreclosure process and the buyer who purchased the property, for less than 20% of its value, had reason to know of the defects in the process. Based on those facts, the court concluded that the buyer was not a bona fide purchaser and the court unwound the sale to the buyer.

This case does not appear to alter the way in which Washington title companies will issue policies to buyers of foreclosure properties if the buyer purchases from the bank after the bank takes title to the property through the foreclosure sale. Business as usual should remain the course of business for title policies issued to buyers who purchase property from the bank, even if the bank acquired title to the property through foreclosure. The title policy that may or may not be revised is the policy issued to a buyer who purchases the property on the courthouse steps, at the trustee's sale, as part of the foreclosure process. Few REALTORS are involved in representing buyers in those purchase transactions but for those who are, buyers should be advised to seek legal counsel for assistance in reviewing the limitations, if any, in any title insurance policy buyer may purchase.

Ultimately, the Bank of America postponement of foreclosure sales and postponements by any other lenders who may follow suit, constitute another difficult situation that our industry must endure in what is proving to be an era of unpredictability and rapid change. However, the Bank of America policy is not indicative of any fundamental flaw in Washington law relative to foreclosures. Washington will land on its feet with respect to this issue.

Mortgage Rates

Mortgage Rates Continue to Fall According to Freddie Mac's Weekly Survey 30-year fixed-rate mortgage (FRM) averaged 4.27 percent with an average 0.8 point for the week ending October 7, 2010, down from last week when it averaged 4.32 percent. Last year at this time, the 30-year FRM averaged 4.87 percent.

15-year FRM this week averaged a record low of 3.72 percent with an average 0.7 point, down from last week when it averaged 3.75 percent. A year ago at this time, the 15-year FRM averaged 4.33 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.47 percent this week, with an average 0.6 point, down from last week when it averaged 3.52 percent. A year ago, the 5-year ARM averaged 4.35 percent.

1-year Treasury-indexed ARM averaged 3.40 percent this week with an average 0.7 point, down from last week when it averaged 3.48 percent. At this time last year, the 1-year ARM averaged 4.53 percent.

Jan Lipetz

Windermere Real Estate

Cell:425.445.5201

Fax: 425.392.0558

http://www.lipetzhomes.com

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