More on Foreclosures

Some time ago, I wrote a post on foreclosures and later, I wrote more on foreclosures. Today, there is a lot to say on the subject, so I have a few more thoughts I want to share with you on foreclosures.

When writing an offer on a lender owned property, most lenders require the purchaser to sign a bank addendum. This addendum can be as few as two pages, but the last one I saw was twenty three pages of legal language, all favoring the lender. The addendum covers most everything that is addressed in the original buy and sell agreement, but rewritten to protect the lender.

Every lender has a little different procedure of doing business and a different set of forms to use. These forms are a hassle, but are a must to read. Recently in a discussion, the question was asked how many read the lender’s addendum. Only about twenty percent acknowledged they read the forms or did more than a quick perusal.

Every deal is different, for example when purchasing a repo from HUD, the seller doesn’t provide title insurance for the buyer. If the buyer requires a title insurance policy, he/she is to order their own policy and pay for it themselves. HUD does provide a Warranty Deed to the property, where other lenders may provide a limited deed.

When purchasing a repossessed property from Fannie May, they place a restriction on the deed to the property you are purchasing stating you may not resell the property within ninety days of the purchase date. A second restriction is placed on the deed stating you may not refinance the property within 90 days of the purchase date for a sum greater than 20% above the pruchase price.

Other lenders have different quirks or maybe more politely said requirements. If you are going to make an investment of time and money, make sure you also make the investment of time and  read and understand all the forms you will be asked to sign in purchasing Michigan real estate. There will be many.