Wednesday, June 24, 2009

Frustrating Foreclosure Findings

Last year my father bought a foreclosure in Stockton. It wasn't an easy process. The bank was slow to capitulate, the realtor was pushing a lower offer that she was double ending etc.

With many other homes for sale on his street, my father is now attempting to purchase another foreclosed home for his mother (my grandma) so she can be nearby, but still feel independent. After much wrangling with my grandmother, he still had the bank to contend with. When he went to sign the papers on this modest home, he was in for a nasty surprise. The bank (BofA)included an addendum, which was over 15 pages, and was downright atrocious about it (giving a 2 hour window to sign etc.). As much as this home made for the ideal situation for my grandmother, I was pleased to hear that he walked away. In my mind, no home is worth signing away all rights and releasing all liability (and then some), the way they require in their addendum (especially on a home priced less than 100k).

We were in a very similiar situation and eventually walked as well. Our take away from the process, when bidding on a foreclosure, ask for the addendum up front.


patient renter said...

I'm glad they stood up to the bank. What kind of stuff did the bank have on the addendum?

Jacob said...

I am curious about the addendum as well. When buying an REO you usually have to take it as is anyway so what else are you waiving?

sacramentia said...

The banks don't negotiate on terms, so they end up with a lower/below market price.

The latest addendum I received has a section in it that limits the amount you can sell or finance the property for during the first 3 months of ownership. I don't like the idea of the seller deed restricting the property, but it is a side effect of the Bank's inflexibility which causes a below market sales price.

The other stuff looks about the same as the other re contracts to me. However, I'm not a lawyer and I don't have enough money to fight a Bank's staff of lawyers so I don't lose much sleep over it.

PeonInChief said...

The reason for the REO addendum is probably to deal with the disclosure requirements of California law. Owners are supposed to disclose everything that's wrong with the place and, since the lender has no idea what might be wrong, they make you sign this long document in which you recognize that fact and promise never to sue them for anything, ever.

I'm not as concerned about that as I would be about, say, title issues. You don't want to buy a place and then discover, years later, that the securitization process had muddled the title.

Paul said...

Or learn that the bank had received reports or other information indicating mold or hazardous materials contamination, and then not disclosed it under the cover of an addendum wherein you agree to hold the bank harmless from everything in the world.