Foreclosure and REO Update

As you may be aware, on October 9, Bank of America extended its foreclosure process review to all fifty states. Consequently, the bank is halting foreclosure sales until this assessment has been satisfactorily completed.

Since BofA announced this review, there has been considerable confusion about the meaning of “foreclosure sale.” This term refers to the final step of the foreclosure process, upon which a delinquent borrower’s property becomes “Real Estate Owned” by the bank. Foreclosure sales are not transactions of REO property.

It’s important to recognize that at this time BofA does not anticipate taking actions to impede the sale or marketing of its current REO inventory. Barring other factors, current transactions may proceed normally. Moreover, any transactions where BofA is involved in financing the purchase of an REO property may continue as scheduled.

While the foreclosure process freeze does not directly impact current BofA REO listings and transactions, some banks are taking steps to suspend REO sales until corrective measures are taken. Agents and buyers should proceed with caution in any REO transaction by taking the following actions:

· Immediately contact the listing agent to obtain further information as to the status of the transaction.

· Confirm the intended lender will finance the sale. Banks have adopted various policies about foreclosures and REOs, and not all properties under affected lenders are impacted.

· Check with the title carrier to obtain a definitive understanding of whether title will continue to be issued. A few title insurers have noted they will not provide title insurance for REOs sold by some banks until these matters are corrected.

· Keep up to date about state-specific developments through your local DRE and Attorney General websites. Particularly in judicial review states, courts may determine that curtailing REO transactions is warranted given the alleged foreclosure process deficiencies.

This guidance is based on our best understanding of the situation as it stands of today, as reported to us by BofA and other sources. Keep in mind things can change quickly. We will keep you posted.