In the remaining 27 states, where the foreclosure process used is commonly referred to as “non-judicial foreclosure”, homeowners will still get a temporary reprieve from foreclosure as Bank of America, the nations largest lender and loan servicer, has not yet completed its own internal review of the documents and filings used in those proceedings.  But if this latest announcement is any indication, it should not be long before those properties are back on the auction block.

Must be an election year I guess.

You can view the press release from the AG here.

To view a .pdf file with details for all the properties that were purchased at last weeks foreclosure auction please select the following link.

Foreclosure Sales Results for October 1st 2010

Why the sudden about face from these lending giants. It starts with a handful of law firms that were hired by these banks to prepare, process and file the necessary foreclosure paperwork with the courts. These law firms have recently come under fire for allegedly providing fraudulent documents and/or affidavits concerning the loans they were foreclosing on. At the heart of the issue is what entity actually holds the legal right to foreclose on these homes. Because of the way loans were packaged and bundled into mortgage backed securities and then sold like stocks on Wall Street, sometimes multiple times, it is quite often difficult to pinpoint the actual legal owner of the note or loan in question without a good bit of research. Many times banks like JP Morgan and Bank of America are only the servicing agent who is collecting the monthly payments from the borrower for the eventual end of the line investor. Rather than research the thousands of individual loan files to determine some of these answers, the law firms in question simply prepared affidavits certifying XYZ Company as the legal owner of the mortgage and they would proceed with the foreclosure process.

Recently several high level executives at these lenders have admitted that they would sign 7000-10,000 of these documents a month without reviewing them for accuracy. Now that the cat has been let out of the bag on this the banks in question have decided it would be prudent to temporarily halt these pending foreclosures to allow them time to verify the accuracy of the information.

This move by the banks will in no way stop the tidal wave of foreclosures happening around the county but will likely push back the inevitable by a couple of months while they sort things out. It is interesting to note that Wells Fargo Home Mortgage has publicly stated that they will not be postponing any of their pending foreclosures and they even took it a step further in announcing that they will no longer issue postponements for a foreclosure that has a pending sale on it. What does this mean for agents or buyers and sellers who are trying to close on a short sale transaction? If you have a short sale pending and it has been approved through Wells Fargo, make sure you close by the date on your settlement letter because there are no second chances anymore.

The average price/value on these foreclosure auction purchases was 74 cents on the dollar!  Imagine purchasing your next home or investment property at a discount of 25% or more!

The first property was purchased at the Factoria foreclosure auction and was a central Seattle townhome project consisting of 5 partially complete units.  The units are approximately 85% complete and were purchased for one dollar over the opening bid of $1,008,500.  The foreclosing lender was owed at the time of trustee sale amounts in excess of $1,860,000 but they chose to discount their opening bid in the hope of attracting a third party buyer at the foreclosure auction.  Estimates to complete the project are about $250,000 for a total investment of just over $1,258,000.  The investor/developer who purchased the properties hopes to resell the completed units at a sales price of $350,000 each.

Next we purchased this 6,340 square foot home in Duvall, WA that sits on approximately 1.5 acres. The current Zestimate on this property is $949,500 and King County has the property tax assessed at $903,000 for 2010.  The opening bid was also discounted by the foreclosing lender, in this case shaving off nearly $500,000 from the amount owed to the bank.  This home was also purchased for one dollar over the opening bid for $595,001.  That equates to less than $100 per square foot.  The house was in great condition with the exception of the landscaping and was a truly amazing deal for our clients.

Finally, we purchased this Ballard/Crown Hill property that has sweeping views of the Puget Sound.  This also was purchased for one dollar over the lenders minimum bid.  Discounted from $861,577 down to $506,340.  The home is just over 3100 square feet and has seven bedrooms, as it was being used as an adult family home.  With a little updating and a new roof, this home will once again shine.

To view these and all the other homes sold at last Friday’s foreclosure auction you can visit the following link.  http://realestateinvestmentfirm.com/auctionsales.pdf

The Seattle Times recently wrote a story about a multi-million dollar mansion in Kirkland’s upscale West of Market neighborhood that has been taken over by squatters.  The home, currently listed for $3.3 million and owned by First Citizens Bank (through their acquisition of Venture Bank from the FDIC) recently saw a family consisting of two adults and two children move into the property and claim ownership of it entirely.  A notice has been posted on the door claiming that “all rights, interest and title in the property” has been transferred to Priority Rose Children’s Outreach of Bothell.  A two week old Charity according to the article.  Coincidentally, the charity shares the same listed phone number as  a Bothell company called NW Note elimination.  A company that “specializes” in “eliminating mortgages” through what many would call dubious practices.  When police were called in to investigate they were shown a document by the new occupant claiming ownership.   Since the police don’t often involve themselves in these type of cases, it will be up to the bank to evict the squatters through proper eviction proceedings and eventually physical removal from the property by the King County Sheriff.

You can read the entire article here.

What are your thoughts regarding this story?  How long do you think it will take the bank to evict the squatters? Post your comments below.

You may view a .pdf with property details for all 3o of the third party sales by selecting the following link.

Foreclosure Auction Sales Results for June 4th 2010