Future homeowners willing to take on some risk could possibly get even better deals depending on how the courts rule on contested foreclosure cases.
I reported, back on January 7, that the Massachusetts Supreme Judicial Court ruled that two lenders erred in foreclosing on two borrowers. According to Bloomberg, a lower court has now ruled that buyers of residential property never really owned it because the seller, US Bancorp, did not have ownership of the property at the time of sale. US Bancorp got the mortgage after the sale. Oops! The case appears that it will now go before The Massachusetts Supreme Judicial Court.
Let’s assume that the ruling will be upheld. Buyers will then be wary of buying bank REO’s because they do not know if banks foreclosed on the properties properly. Ironically, the bank REO’s hitting the market now have a better chance of having the proper paperwork because of the increased scrutiny. In any case, banks will have to lower the price of their property to move it. The end result is that buyers might get better deals.
In any case, buyers should make sure that they purchase title insurance!