Wednesday, November 10, 2010

Online Foreclosure Auctions – Beware of The Hidden Risks

Recently, we've been receiving phone calls from clients inquiring about the legal issues surrounding buying property from online foreclosure auctions. Approximately 90% of those people purchased property thinking they bought it free and clear of mortgages and other liens. Unfortunately, that wasn't the case and there wasn't anything I can do for them. One person called in asking about obtaining title insurance. I told him that title insurance was available but it would require a lot of work because of the issues related to the mortgage mess, including the fraudulent affidavits. I further explained that the fraud causes buyers to assume additional risk even with title insurance. The risks relate, in part, to prior owners coming back and claiming that their home had been wrongfully foreclosed and wanting their home back. The lesson here is to be exceptionally careful when purchasing property from these online foreclosure auctions and that title insurance doesn't cure all that is ill. With all the issues surfacing related to the foreclosure process, what other risks are the buyers assuming?