Foreclosed Home Buyers May Face Nasty Surprises

Attorney Richard Gaudreau writes in The Huffington Post:

• Buyers of property at foreclosure are looking for a bargain, but that risk now must include the possibility that the title will be defective. One unsuspecting family purchased a home at foreclosure, intending to sell it to their daughter, only to have a title company question whether they acquired good title after they'd already invested $100,000 in renovations. (Nightmare in Land Court, Mass. L.J.)

• In the wacky world of securitized mortgages, who owns the mortgage is a 'shell game' worthy of the most accomplished back-street hustler. How securitized mortgages caused the collapse of the American economy is an oft-told tale that needn't be repeated here. Suffice it to say that during the housing bubble lenders packaged thousands of mortgages together into each securitized trust, selling shares off to Wall Street investors much like selling shares of stock.

• Since banks no longer intended to hold their own mortgages, the incentive to avoid 'bad mortgages' gave way to greed because these now would be someone else's problem.

For more, see Foreclosure Sale -- Buyer Beware!

(1) Richard Gaudreau is a consumer bankruptcy lawyer admitted to practice in New Hampshire and Massachusetts.