Red Tape is Behind the Forestalling of Foreclosure Sales

April 27th, 2009 | Tags: Foreclosure

The picking up sales is pivotal to tackling the recession mood of the economy but red tape is behind the forestalling of foreclosure sales. Those hunting for bargains are flocking to purchase bank repo homes but the settlement often take time because of bureaucratic bungling. The irony of the situation is that both the lenders and the purchasers want quick transaction but things do not move.

Andrew Garcia and his fiancée Beth Anne Hoffmann are one of the many facing this problem. They rushed to arrange for financing to purchase a nest near Baltimore in January. The owner of the unit, a bank, broke its own closing deadline a month later. Since then the couple has been hanging in a state of limbo. Desperate they turned to the local congressman for help. All they got was an apologetic call but no inked paperwork. Garcia grumbled and said, “It\’s unbelievable. With all we hear about all the homes out there that need to be sold, I have to call my congressman in order to purchase a house. If that\’s the process, there\’s no way we\’re going to clear all these foreclosures.”

The banks sitting on repossessed units are posing the biggest challenge to buyers. The banks themselves are quick to give the nod to a bid and ink an agreement. But the final settlement gets delayed by red tape. Many buyers get buzzed off. If this continues the real estate market stands very little chance to pick up recovery. The foreclosed houses comprise approximately a quarter of all the houses in the shop shelves. Their removal is vital not only for the real estate but for the economy in general. The problem is that the banks are far removed from the site of the house and buying from these banks is quite something different from buying directly from a local owner.

Vivianne Couts a realtor from Virginia said, “Things go wrong, and it takes the bank a lot longer to deal with them. There are a lot more people involved, many more layers. The Realtor can\’t always call the bank and say, \’What\’s going on here?”

Garcia and Hoffmann have found out a lot of information after digging into the history of the unit. After repossessing the house the banks found that the previous owner had filed bankruptcy. The bank now had to submit papers showing that it had foreclosed prior to the filing of bankruptcy. But that letter took time and only appeared when the congressman Rep. John Sarbanes (Democrat) took up the matter.