Use Of Special Addendums & Bank-Designated Title Agents When Dumping REOs Mark Wave To Unload Defectively-Titled F'closed Homes Onto Unwitting Buyers?

Naked Capitalism reports:

• Another ticking time bomb in the realm of real estate bad behavior is bound to go off sooner rather than later, and it is likely to impede normalization of values of residential property.(1)

For more, see Latest Real Estate Time Bomb: Title of Foreclosed Properties Clouded; Wells Fargo Dumping Risk on Hapless Buyers.

(1) The story revolves around the use of a certain type of contract addendum (go here for Standard Form REO Addendum) sprung on prospective buyers at the "11th hour" by lenders selling recently-foreclosed homes, coupled with the use of title insurance policies containing a special clause that renders the policy worthless (providing no protection to the buyer) if the foreclosure action is subsequently found to be void (because of legal defects, irregularities, fraud, etc.) in order to shift all the risk of buying these "pink elephants" onto the unwitting buyer (unwitting, but not necessarily unsophisticated - the level of sophistication needed to spot this scam is probably beyond the scope of most lawyers who aren't real estate specialists).