OT---buying foreclosures

Courts and politicians are beginning to recognize serious flaws in many residential, and possibly other, bubble-related foreclosures.
Like the original PR releases that bubble Mtg problems would be limited to subprimes, the PR is that only some judicial (Court) foreclosures are affected, but questions have been raised about Trust Deed (non-judicial) foreclosures as well.
If you're thinking about buying bank/lender owned property that's gone thru foreclosure, be sure to get legal advice from an atty who specializes in, or is well versed in, AND UP TO DATE ON, real estate law/foreclosure developments.

I was interested in buying a couple foreclosures a couple years ago, as an investment. But after going thru several homes, I decided not to bother. People getting foreclosed on have money problems, usually going back years. They don't have the money to properly maintain the homes. Every foreclosure I looked at was pretty sad. Of course in Michigan, it was never easy money mortgages, as much as job losses that caused foreclosures. Between the property condition and the bank's wanting top dollar, it really didn't look like a good investment.

We looked at buying foreclosures about 1-1/2 years ago in Florida.
What we found were foreclosed homes in subdivisions that were almost ghost towns, but still had the subdivision home owner maintenance fees. Real estate salesperson kept saying that didn't matter, all that would be forgiven, but the dog still had its teeth. Good homes on nice properties were still being offered at retail.

I purchased a foreclosure next to my house in 2004 and went through a title company. An issue came up later and the title company paid for it. Going through a lawyer, you would pay for the lawyer's opinion and his mistake. The cost of a title company wasn't that much compaired to a lawyer.

I will only use title companies.

George

Like anything in life, do your research. I wouldn't automatically assume that any lawyer or title-insurance company is going to be thorough. Some are and some aren't. I've bought several foreclosed properties and discovered many mistakes made by attorneys and title companies. All from banks and all in northern Michigan.
With any title insurance company I've dealt with - they have many loopholes in the fine-print to protect them from liability. They have to make an overt mistake and miss something in the general records to be liable. If something hidden and estoric pops up, often then are not.

Also, in many states, I wouldn't touch a property offered with a quit-claim deed unless awful cheap.

Here in Otsego County, New York . . . when the county sells a property, they back it and guarantee it 100% even though they ONLY use quit-claim deeds - which is kind of strange.

And yeah, as another mentioned, many if not most of these properties are very run down, stripped, etc. But for me, that's what I want. A $150,000 house that sells for $25,000 can be a pretty good deal . . . and have low taxes until you get around to fixing it up. Since I'm a non-resident, the taxes I have to pay in Mighigan are doubled - so having the houses in bad shape is a big assest - until it comes time to sell or live in them.

Title companies are pretty good at identifying possible title problems, but they won't solve them- they'll refer you to an attorney, and won't insure title until their underwriters are convinced the problem has been solved.

Foreclosures are generally non-judicial in Washington, and there have not been any successful appeals, to my knowledge- the law provides that if a borrower is claiming a defect in the procedure, he must bring it up before the foreclosure, and once the sale has occurred, its final.

UPDATE/CLARIFICATION: When I made the original post, I meant mtgs that'd been resold to Wall St houses to be sliced 'n diced, almost all, or maybe all, going thru the MERS system.
While county recorders attacked Mers and lost, this can of worms has been resurrected. I fully expect the financial industry to force a case into the Supremes, who'll decide any shotcuts were'nt material, overriding any inconvenient state laws to the contrary, but it'll take time.
Attys smell blood ($$$) in these bubble foreclosures, though, and're looking for any evidences of forgeries, frauds, etc, (reportedly widespread)to base a case on. Don't be surprised if the industry doesn't appeal for a Federal guarantee of bubble foreclosure titles on the grounds raising any questions would disrupt too much of the economy.
There's an old saying: "When the elephants dance, the mice get crushed".

We bought our home here in Arizona in 1998 and our Title Company handled the entire process for our benefit including bringing to our attention several items that the seller had to have an attorney correct on the deed because of an former HOA covenant that was no longer enforced but which if the HOA which was still active at the time wanted to they could reinstate at will. We had no financial institution involved with the process so I felt the Title Company was a very buyer supportive approach to our home purchase.I would use a Title Companies expertise again even if a financial institution was involved. I sure would not have an Attorney take time from his busy routine to handle something as important to me as my Money and my Home.JH

Mike,
If I remember this correctly, it happened 6 years ago, the property I purchased was foreclosed on by a bank. For the bank to get ownership of the property in Indiana, it had to go to a sheriff's sale. I was the only person at the sheriff's sale besides the lawyer representing the bank. I had previously talked to the lawyer representing the bank and to the title company before the sale to get all my ducks in a row. At the sale, I had to have a letter from my bank stating I could pay for my offer. I made an offer to at the sale and the lawyer excepted the offer. The offer stated he was to give a clear deed or title to property and pay all outstanding leans and expenses. The title company researched all leans and the title company issued me a title to the property. Later a lean came up and the title company had to pay that lean. I don't have a deed or abstract on the property, the title company issued me a title instead. I never used an attorney. The title company did all that work for me. I may have left something out, but to my best recollection, this is what happened.

I encourage everyone to check out title companies. I've used them more than once. Keep in mind an attorney can only give you his opinion. He will not pay for his mistakes like a title company will. So much for attorneys.
George

I don't think property values have hit rock bottom yet. They're still foreclosing like crazy here in Michigan.

Well, as long at the local title companies keep steering their title problems to me, I'll be happy.

You were the buyer- of course you didn't need a lawyer. Sounds like the seller (bank) had a lawyer, and I would imagine he worked with the title company to make sure title was good. Its up the the seller to clear title, because buyer will just walk away if title isn't marketable.

Would have to know the circumstances of the lien (not lean) that came up later- but you had title insurance from the title company, so they stepped up to the plate and paid it, as they are supposed to.

I get a couple cases a year where somebody "saved" a couple hundred bucks by home-brewing a deal on the hood of the pickup, and it was now going to cost them a couple grand to fix it. Avoiding lawyers in every circumstance can be hazardous to your wallet- hope it works out OK for you.

You must be a lawyer. In Indiana, you buy property at a sheriff's sale, you also buy all the problems that go with it, including leans. It is sold as is! I'm sure a title co employs legal people to research before they sell you title insurance.

Will lawyers insure their work and pay for problems that come up later?

George