Is there a new foreclosure halt happening? Who’s blocking foreclosure sales now and what does it mean for the real estate investing community?
The nation’s biggest home loan lender announced a new foreclosure halt this month, as the OCC (Office of the Comptroller of the Currency) rolled out new rules.
After announcing the pause in some foreclosure sales, Wells Fargo said it was reviewing the new regulations to ensure compliance. Citigroup has said they are also contemplating how these new guidelines will affect their foreclosure processes. Chase had stopped their foreclosure pipeline, but according to Bloomberg, is now back in full swing. United States Bancorp and Bank of America don’t seem to see any issues and are not reporting any slowdown.
The new foreclosure review criteria, that must be completed within 60 days prior to sale, certainly means a bigger burden on lenders and servicers. While the OCC claims it has not specifically directed a slowdown in foreclosure activity or repossessions, it has instructed loan servicers to cancel or postpone foreclosure sales if any of the 13 new questions raise potential issues.
So what’s the fallout for real estate investing?
While some homeowners might be glad for a little longer grace period to arrange short sales or find an investors to buy them out, others could be lulled into a false sense of security which causes them not to take action in time. While many just want foreclosures churned through the recycling system as fast as possible, even a partial, temporary slow could create more opportunities for investors. It provides more time to get deals approved on the acquisition side. At the same time, it could hold off bringing down values in foreclosure dense neighborhoods with auctions; giving time to flip houses at higher prices for more profit and bringing up local values further.