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snfexpress · 07-18-2012, 11:14 PM

[rant]

We're in the process of selling two homes that we took back. Between the fees charged to foreclose or take a deed in lieu and the time that it takes to get everything accomplished we are spending a bunch!

Fees use to be about $2,000. Now they are in the $5,000 range. Why? Because the title companies know that they can get it from most of the big guys!

Now my take on why the whole process is taking so long, and I'm not referring to the statutory requirements:

It used to be that when you didn't make your payments on a loan, the lender would foreclose and you'd receive a 1099 in the mail with the amount of debt relieved. This means that if you owed $100,000 then you'd get a 1099 for $100,000 and this would be treated as "income" by the IRS and you'd have to pay tax on this amount. On top of this, many states are "deficiency" states meaning that you'd be sued for the difference of what was owed and what the property sold for if there was a shortage.

Nowadays, you don't get the 1099 and many states have required a temporary suspension of the deficiency law. What does this mean for the guy who doesn't make his payments? It means that he is no longer accountable for his behavior.

Okay, now that we are no longer holding borrowers accountable, we have a general malaise when it comes to responsibility including our service industry. Case in point: RESPA (real estate settlement procedures act) which is enforced by HUD, has a requirement that the seller of a property cannot require a borrower to use a particular title company as this is called steering and is subject to severe penalties. Locally, Western Title has the contract with HUD and HUD-owned foreclosed properties. Guess what? HUD requires that the buyer use Western Title (against the law except they are exempt) and Western Title, knowing that they have this wonderful contract, won't hire additional people because there is no penalty if they don't close on time.

I believe that this general feeling of lack of accountability is trickling down such that many are just saying what the heck - nothing is going to happen to me if I don't do...

One final case: We took back a house in April. Paid the fees, including title insurance and sewer liens from back in 2008. Now title insurance is supposed to protect you from anything that didn't pop up at the time of closing. We are now in July and are closing (after spending money to make the house marketable) and a sewer lien has popped up from 2008. The title insurance was from Western Title and the new closing is with Western Title. They want me to pay the lien!

[/rant]

Okay, back to normal...

Stiles, I feel your pain...

07-18-2012, 11:14 PM	#5
snfexpress Montana Master Join Date: Jan 2006 Location: South Posts: 2,499 M.O.C. #5140	[rant] We're in the process of selling two homes that we took back. Between the fees charged to foreclose or take a deed in lieu and the time that it takes to get everything accomplished we are spending a bunch! Fees use to be about $2,000. Now they are in the $5,000 range. Why? Because the title companies know that they can get it from most of the big guys! Now my take on why the whole process is taking so long, and I'm not referring to the statutory requirements: It used to be that when you didn't make your payments on a loan, the lender would foreclose and you'd receive a 1099 in the mail with the amount of debt relieved. This means that if you owed $100,000 then you'd get a 1099 for $100,000 and this would be treated as "income" by the IRS and you'd have to pay tax on this amount. On top of this, many states are "deficiency" states meaning that you'd be sued for the difference of what was owed and what the property sold for if there was a shortage. Nowadays, you don't get the 1099 and many states have required a temporary suspension of the deficiency law. What does this mean for the guy who doesn't make his payments? It means that he is no longer accountable for his behavior. Okay, now that we are no longer holding borrowers accountable, we have a general malaise when it comes to responsibility including our service industry. Case in point: RESPA (real estate settlement procedures act) which is enforced by HUD, has a requirement that the seller of a property cannot require a borrower to use a particular title company as this is called steering and is subject to severe penalties. Locally, Western Title has the contract with HUD and HUD-owned foreclosed properties. Guess what? HUD requires that the buyer use Western Title (against the law except they are exempt) and Western Title, knowing that they have this wonderful contract, won't hire additional people because there is no penalty if they don't close on time. I believe that this general feeling of lack of accountability is trickling down such that many are just saying what the heck - nothing is going to happen to me if I don't do... One final case: We took back a house in April. Paid the fees, including title insurance and sewer liens from back in 2008. Now title insurance is supposed to protect you from anything that didn't pop up at the time of closing. We are now in July and are closing (after spending money to make the house marketable) and a sewer lien has popped up from 2008. The title insurance was from Western Title and the new closing is with Western Title. They want me to pay the lien! [/rant] Okay, back to normal... Stiles, I feel your pain...