The foreclosure laws in the state of Missouri allow for proceedings which take place in or out of court. The foreclosure proceeding which is used in conjunction with the circumstances of the property determines the length of time until the process is complete. If the foreclosure process is routine and free and of any complications it typically takes a few months before it is complete.

Missouri In-Court and Out-of-Court Proceedings Defined

Unlike the laws in other states in the US, an in-court foreclosure proceeding is typically not as common. However an in-court proceeding may be necessary when there are complications with the property title or the mortgage deed. Additionally, an in-court foreclosure proceeding may be used when the deed does not state that the lender has the right to proceed with a foreclosure sale in the event payments are in default.

In terms of an out-of-court proceeding, the lender has the right to initiate a foreclosure sale if the borrower defaults on the mortgage. According to the foreclosure laws for the state of Missouri, although the lender has the right to initiate a foreclosure sale they must follow the guidelines set forth in the mortgage deed. These are written in the form of a clause and include the fact that the lender must provide advance notification to the borrower that they are initiating a foreclosure process as the result of mortgage payments in default.

In order to begin the foreclosure process with an out-of-court proceeding the lender must prepare the documentation and then present it to the borrower. Once this step is complete then the property in foreclosure can be scheduled for a foreclosure sale. According to Missouri law, the borrower has the opportunity to satisfy the payments which are in default in advance of a public auction which prevent the foreclosure proceedings from moving forward.

Missouri Foreclosure Sale Process

According to the foreclosure laws in the state of Missouri before a public auction can take place on the property in foreclosure, the sale must be announced in a local publication. If the property is located in a rural area with only a few hundred or a few thousand residents then publication of the sale is not required.

On the other hand, if the property is located in an area with a dense population then Missouri foreclosure law requires an announcement of the foreclosure sale in a primary publication such as the local newspaper. The announcement must be made at least twenty days before the foreclosure sale date and in some counties in Missouri, the sale can be announced on a weekly basis up to four weeks before the public auction takes place.

Announcements of a foreclosure sale are handled by a trustee who must also provide advance notice of the foreclosure proceedings to the borrower. The notification must contain all of the details of the foreclosure sale in addition to pertinent information regarding the property. This must be accomplished within 20 days of the actual foreclosure sale date.

There must also be documentation known as a deed of trust which will determine who is responsible for overseeing the foreclosure sale. Foreclosure sales or a public auction as it is commonly referred, take place during regular business hours according to the Missouri foreclosure laws. If for any reason the sale does not take place, the trustee is responsible for rescheduling the sale and providing notice in accordance with the foreclosure laws of Missouri.

There are a few laws pertaining to the right of redemption on the part of the borrower. In the event the buyer of the property at the public auction happens to be the lender then the borrower has redemption rights. The process for pursuing redemption is quite complex the way the laws of Missouri are written however, the borrower still has the right to endure the process to win back the property from the lender.

At issue is whether a bank can escape civil liability for having filed flawed or fraudulent documents in a case by voluntarily dismissing the case which allows the bank to refile the action at a later time if they choose to do so. So basically if the bank gets caught having done something wrong, they can just dismiss the case and walk away without being punished.

Roman Pino’s attorney, Tom Ice, a Palm Beach based foreclosure defense attorney stated that Bank of New York opted to dismiss the case once he requested copies of documents and depositions from the now defunct Law Offices of David J. Stern, the central culprit in the robo-signing scandal.

“The objective here was to hide from punishment for the wrongdoing,” Ice said.

Legal scholar Michale Allan Wolf, a University of Florida property law professor stated, “Here you have the highest state court in a state ravaged by foreclosures deciding on their own to address this issue, and that is significant. They seem to be anxious to enter the fray on this, and there is no question this is a fascinating topic.”

Both the MBA (Mortgage Bankers Association) and the FBA (Florida Bankers Association) said the ramifications of a ruling against Bank of New York could have a “potentially devastating” financial effect in Florida.

They feel that lenders will slow down on lending to homeowners and make sure every single document is triple checked because if at some point down the line they do find a paperwork error, then they will be procluded from dismissing the case and refiling once the error has been corrected because of the possibility of facing sanctions from the court for doing so.

The FLTA (Florida Land Title Association) and ALTA (American Land Title Association) also are concerned that investors who purchase foreclosed properties will be compelled to defend their title if a former owner seeks to overturn a foreclosure judgment that was voluntarily dismissed by a lender.

But Nova Southeastern University law professor Robert Jarvis doesn’t buy the economic Armageddon argument. “Will it be devastating? That’s an argument the bankers have been saying all along, and it’s ridiculous,” Jarvis said. “All anyone is saying is that bankers need to get their paperwork in order.”

When Ice’s request to overturn Bank of New York’s voluntary dismissal so sanctions could be considered was denied in Palm Beach County Circuit Court, he appealed to the 4th District Court of Appeal. That Court agreed with the Circuit Courtt, but certified the question to the Florida Supreme Court. The appeals judges there said they wanted the high court to weigh in because “many, many mortgage foreclosures appear tainted with suspect documents.”

“On one hand, you have the parties with the absolute right to voluntary dismissal,” Ice said. “On the other hand is the court’s right to regulate the litigants and, more importantly, the truthfulness of the litigants.”

“The underlying dispute may be over, but the court is able through its own integrity to say, ‘We still have questions,’” Jarvis said.

With all of the new investors entering the house flipping market the competition to get a good deal has significantly increased. This is driving up the prices of these distressed properties and shrinking profit margins. However if you do find a good deal for a house flip you should stop and ask yourself the following questions before proceeding with the purchase.

1. Did you hire a home inspection expert to check out the property and make sure there are no major repairs needed? Cosmetic fixups like having to repaint or replace a door or window are no big deal. But if your inspector tells you that the house needs a new roof, you are most likely going to want to pass on this property. Every repair eats into your profit margin so you need a qualified expert to tell you exactly what it is you are buying.

2. Does the property belong in the neighborhood where it resides? Every neighborhood has that one house known as the “white elephant”. It’s the house that just doesn’t belong with the rest of the herd because it is so different. Either it is overdeveloped or the wrong type of property. For example, you don’t want to buy a single family house that is in the middle of a block filled with high rise apartments. You don’t want to buy the odd-ball property on the block as it will be so much harder, if not impossible, to sell and make a profit on.

3. Do the recent sales, or “comps” in the neighborhood support the value you think you can get for the house when you go to sell it? If you pay $100,000 for a house that needs repairs and all of the other houses on the block are only selling for $110,000, then you are not going to make any money. You want to buy properties that are distressed, in need of repairs, and selling way below the market value of the rest of the neighborhood.

4. Will the repairs needed to make the property marketable be affordable? You want to make as few major repairs to a property as is absolutely necessary. And the last thing you want to do is start tearing down walls or expanding the house. This is what turns a profitable flip into a money pit. Leave the heavy lifting of remodeling and customizing the house to the people you sell it to. You just need to make the house look pretty.

5. Can you make your repairs to the house in the shortest amount of time possible? This is very important because every month you spend fixing the property you have carrying costs and expenses associated with owning that property. These are the hidden figures that can eat away at your profit margin. If a house does need significant repairs, make sure you budget in these carrying costs when determining how much to pay for the house. Also, make sure you have the time commitment to get the work done. Don’t buy a house that needs five months work of work if in three months you plan on going on vacation!

6. Is the property located in an area where there are buyers and houses turn over regularly? It’s very easy to at first look find a property and think this is a steal after looking at the comps. What you need to also look at is how old are the comps? When was the last house sold in the neighborhood? How many houses in that neighborhood sell every month? A great price on a house does you no good if it’s going to take you six months to sell it.

7. Do you need to hire a professional contractor to do the repairs? We all like to think of ourselves as handymen or women. That we can fix anything and why do I need to pay someone to do something I can do myself. Most of the house flipping disasters I have seen were caused by homeowners who decided all of a sudden they were professional builders. It’s great to think you can tile a bathroom floor all by yourself. It’s another thing to actually go out and do it. These are people who are dollar smart but penny foolish. Don’t take on more than you can handle.

These questions will give you a guideline of what makes a good flip. If you take the time to answer them before you buy you will have a much greater chance at successfully making a profit on your investment.

With the glut of houses currently in foreclosure and on the market along with the tightening of credit requirements enabling people to get a home loan, lenders do not want to foreclose on a property unless they are left with absolutely no choice. However, when this happens the foreclosure process proceeds differently depending on whether the property is located in a judicial or non judicial state.

A judicial state is one where the court must approve of the foreclosure and it’s process follows a very similar one as any litigation with a summons and complaint, answer, hearing, and resulting judgment.

A non-judicial state is one where the foreclosure process does not have to go through the courts. The state government has setup a list of steps the lender must follow and if they do then the foreclosure is granted. These steps can vary buy normally go as follows:

• A borrower misses a payment on their mortgage and is now in default. Technically after missing just one payment a lender can begin the foreclosure process but, as I stated above, this is not something they want to do so they will do everything in their power to work out a resolution with the homeowner. Most lenders will wait up to 4 months before they decided a foreclosure process is necessary.

• Once a borrower is more than sixty days past due on their loan the lender can send out a letter to the borrower known as a Notice to Accelerate. This tells the borrower that the lender plans to accelerate the loan and make all future payments due now along with any interest, late fees, attorney fees and penalties currently owed on the note. The borrower can at any time stop the foreclosure process by paying off the amount in arrears along with these penalties.

• If the lender receives no response or satisfaction from the Notice to Accelerate then they will send out a Demand Letter the formally states the borrower is in default and all payments, interest, etc are now due. The borrower typically has 30 days to respond to the demand letter. If they do not satisfy the loan at that point then the foreclosure process continues.

• The lender will next send out a Notice of Default stating the borrower has defaulted on the loan agreement and the lender plans to proceed with a foreclosure action against the property in order to take possession of the property and recoup their losses on the loan. Once again the borrower normally has up to 30 days to respond to this Notice of Default.

• If the borrower fails to satisfy the requirements of the Notice of Default the lender will then serve them with a Notice of Sale. This is essentially an eviction notice informing the borrower of the lenders intention to sell the property at a public auction and giving the borrower notice that they must vacate the property within a certain time frame. This notice will list the actual sale date of the property. Most non-judicial states also require the lender to post this notice in the property local newspaper for a specific period of time before they can proceed.

• Once all of the above requirements have been met and the borrower still has not complied with their obligations to the lender then the property is sold at a public auction, also known as a “Sheriff’s Sale”. The property is then deeded to the highest bidder or to the lender if no one meets the reserve prices set at the auction.

It is important to note that a borrower can stop the foreclosure process at any step up until the sale date by bringing the loan current. Also, as I stated, lenders do not want to take these properties back into inventory as they normally will lose tens of thousands of dollars on a foreclosed house so they are very motivated to work with the borrower. This could be either through a loan modification or a forbearance agreement where the lender agrees to allow the borrower to start making payments again and takes the amount that is in arrears and sets it up as “second mortgage” on the property. This lets the borrower make additional small monthly payments to pay off the arrears along with their normal payment and retain the property.

There are also other programs that can help borrowers bring their loans current and allow them to continue from that point making their regular payments. Some are directly through the lender. Others are government programs that can help now, though the money will have to be paid back later.

Answering the question, “How does the foreclosure process work?” shows that there are many opportunities for borrowers to bring their mortgage current and avoid losing their home. There are also options that do not involve foreclosure, even if they do not allow one to keep his home such as a short sale. Almost any of these options is better than the damage a foreclosure can do to one’s credit rating.

Robo-signing is when a foreclosure law firm or possibly even a title company, sign affidavits and notarize documents stating the borrower agreed to certain terms or conditions when in reality, the borrower did not sign the document. This brings into validity the legality of the mortgage (lien) on the property and therefore if the court rules the mortgage is invalid, the borrower can not be in default on it and the foreclosure judgment is denied. This, in some cases, has turned into a windfall for the homeowners as they have suddenly found themselves owning their property free and clear.

The foreclosure process in Florida starts when a borrower (also known as a mortgagor) has defaulted on his loan payments for 90 consecutive days. Many lenders will wait longer to start the process in the hopes of coming to a non judicial resolution with the borrower but the 90 days is the normal starting point

Most loans go into default because the homeowner has suffered some sort of financial catastrophe such as an injury that prevents work, divorce, complete loss of employment, a cut in hours or salary, etc. The foreclosure process is the means by which the lending institution can put in a claim for their collateral for the loan they made to the borrower (the property) in the hopes of recouping all or some of their investment.

Florida is a judicial foreclosure state which means all foreclosure actions must go through the court system and all foreclosure judgments must be issued by a Judge. The steps of the foreclosure process are as follow:

1. Notice of Default 

This is a letter sent by the lender to the borrower in conformance with the terms written in the mortgage document letting the borrower know they are currently in default on their loan and requesting the borrower contact the lender to rectify the default. This is not a judicial action. It is simply a letter between the lender and borrower. Nothing has yet been filed with the court.

2. Lis Pendens

This is a document that is filed with the Clerk of the Court letting the entire world know there is a “potential” lien against this property. This is so anyone who attempts to buy the property and runs a title search will know there is a potential lien which must be satisfied before clean title can be given. This is still not the beginning of the judicial foreclosure proceeding. It is just a filing in the public records of the county where the property resides.

3. Summons and Complaint

This is the actual judicial document which starts the foreclosure process. The summons is a notice to the borrower that they are being sued by their lender for default. It must be personally served on the borrower. If the borrower can not be found then it must be mailed to the last known address of the borrower and posted in the property newspaper. Mailing the summons and posting it in the newspaper is known as “constructive” service of process, meaning while the person was not physically served with the document, every attempt has been made to notify them of the pending litigation. The complaint is the actual body of the lawsuit. It states who the parties are, which court has jurisdiction over the matter, and in detail describes the reasons why the borrower is in default and asks for the court to grant a foreclosure judgment. The borrower has 20 days to answer the complaint or they are considered in default and the court can grant a summary judgment against them in favor of the lender.

4. Foreclosure Judgment

This is the document which grants the lenders motion for foreclosure and sets up a date in the future (normally 30 days) when the property will be sold at a public auction. It is important to note that throughout the entire foreclosure process in Florida, the borrower has the right of redemption.

5. Redemption

This is the borrowers right to “redeem” the loan meaning if at any point up until the actual sale of the property they are able to come up with the money to pay the lender then they are allowed to do so and the foreclosure judgment is declared null and void. The borrower retains possession of their home and the loan terms stated in the Note and Mortgage go back into effect. Payments must be made again by the borrower on time and in full or the lender can ask the court for an expedited judgment of foreclosure based on the borrowers previous default.

6. Sherriff’s Sale

This is the actual foreclosure auction, normally occurring at regular times of the month at the county courthouse where the property is placed on the auction block and the public is allowed to bid. The lender does place a reserve amount on the property meaning if no one bids above the reserve amount then the lender maintains possession of the property and is given title by the court. This then becomes what is commonly known as an REO property meaning it is owned by the bank. The bank can sell this property privately to an individual like any other normal purchase and sale of real estate.

7. Right to appeal

The homeowner has ten days from the conclusion of the auction to appeal the sale or again to redeem the property. If they do not act during this ten day period then either the lender or the winner of the property at auction is issued a Certificate of Title by the court and now has legal possession of the property.

Texas uses a “Deed of Trust” to record a mortgage on a property. A Deed of Trust is a document that allows the lender (who lent the money to purchase or refinance a home), the right to foreclose without obtaining a court order.

The process in Texas normally proceeds as follows.

1. Loss Mitigation

This is where the lender tries to come to terms with the borrower to avoid the foreclosure process completely. It can include any or all of the following:

• Collection Calls
• Demand Letters
• Offer of a Loan Modification
• Forbearance Agreement

2. First Notice of Default (also known as the First Notice)

This is sent to the borrower by certified mail, return receipt requested, and notifies the borrower that they are formally in default and that the lender requires payment.

3. Intent or Notice to Accelerate

This document is sent to the borrower informing them that the lender intends to utilize their right to accelerate the loan payments and “call the loan due” meaning all remaining amounts owed on the loan including late fees, interest and penalties are now currently owed and due.

4. Notice of Sale

After at least 20 days from sending the Notice to Accelerate, the lender will send the Notice of Sale (also known as the Second Notice)

This is sent to the borrower by certified mail, return receipt requested but there is no requirement that the borrower actually receive it. Notice is also filed with the clerk of the court and posted at the courthouse and in the appropriate newspapers. The lender must give the borrower at least 21 days until the sale date and the sale can only occur on the first Tuesday of every month.

5. Foreclosure Sale

The property is put up for auction and the highest bidder gets title so long as they have bid more than the lenders reserve price for the property. The borrower does not have to leave the property on this day even though they are no longer the legal owners.

6. Eviction Process

The new owner of the property whether it be the person that won it at auction or the lender who retained it at auction gives the homeowner a written notice of eviction. This gives the homeowner three days to vacate the property. After the three days expire the owner can file an eviction case in the appropriate justice court. A hearing will then be heard normally within a week and the judge will grant an order of eviction giving the homeowners five days to vacate. If the homeowner still does not leave then the sheriff is authorized to enforce the eviction and forcibly remove the homeowner.

There are ways to avoid or delay the foreclosure process. If the homeowner files bankruptcy then the foreclosure process is immediately stopped. The bankruptcy court can force a lender to accept a payment plan which can be spread out up to five years. The borrower can also agree to a loan modification with the lender. This is where the lender agrees to change the terms of the loan and lower the monthly payment to an amount the borrower shows they can make on a regular basis.

While the housing crisis has spread across the country, California has by far been one of the hardest hit markets. One of the primary reasons for this is the fact that housing prices in California skyrocketed faster then the average person’s income could afford. When the people who work in a neighborhood can no longer afford to live their, then an unnatural “supply and demand” exists. Home values in California were in some areas doubling every 18 months. This is the type of unsustainable growth that causes the exact type of real estate bubble burst we are currently in. In fact, home prices in California have fallen at levels that are unprecedented in our nation’s history, even going back to the great depression.

Miami, Florida has also been heavily hit by declining real estate values. As the largest city in the state it shows the decline the greatest but all of Florida, especially South Florida has been devastated by this market. In Florida the weak resale market along with extremely difficult mortgage terms to qualify for and record high rates of foreclosures and short sales have completely wiped out hundreds of millions of dollars in equity across the state.

In fact, Miami has been among the worst home markets in the country for two years running. The condo boom in Miami and all of Florida just a few years ago has fueled further problems that have now spiraled into a massive real estate bust. Condo prices were hit the hardest. Condominiums that were selling for $400,000 just 5 years ago are now worth $75,000 in some parts of the state. Because of this many lenders have completely stopped loaning money on condos. This means only cash buyers can purchase them so with fewer people buying, prices continue to drop.

While Florida and California may have been easy to predict as being among the first housing markets to crumble when the real estate market crashed because of their rapid increase in property values, other markets took longer to show the effects. These markets include Arizona, Nevada, Indiana and Michigan. In Michigan, where layoffs from the automobile industry have been been significant, the bad economy is hurting real estate values even more.

While most economists will disagree on whether we have finally “hit bottom” when it comes to property values, I believe we still have some more declines to go through in 2012 and early 2013 before we start to see some significant improvements. My reasoning is that while it’s true most of the sub-prime mortgages that caused the initial foreclosure crisis have already gone through the system and been foreclosed, there is still a very large backlog of homes waiting to go through the courts.

These homes mostly were financed with ARMs (Adjustable Rate Mortgages) and they are still coming up for their adjustment timetable or reset in the near future. During the real estate boom, many people took out 2, 3 and 5 year adjustable rate mortgages. What this meant was there mortgage payments were fixed at a very low, below market, rate for the initial term of the loan, and then they would “reset” or adjust to current market conditions.

Well many of these 5 year adjustable loans are now about to come due. As these mortgages are reset, even more homeowners will find themselves facing the reality of being unable to pay their monthly mortgage payments. When that happens they will be forced to either face foreclosure or in some cases make a short sale on their home since refinancing has become impossible for these people due to tighter credit restrictions and no equity in their properties.

However there is hope. Certain markets have stabilized and some have even started to show an increase in property values again. The largest signs of recent recovery are occurring in Arizona (1.1%), Vermont (1.2%), Wisconsin (1.3%) and Iowa (a whopping 3.9%!) Other real estate markets are showing much smaller growth but it is still better than the double-digit declines we have grown accustomed to.

Another reason the real estate market should be looking up as we get through the year 2013 is because loan qualifications are relaxing. FHA has stepped in to fill the gap left by the sub-prime lenders and is once again performing the function it was originally setup to do, create lending opportunities for people with provable income and respectable credit. FHA’s guidelines will allow more homeowners to qualify for loans meaning more competition for housing which will lead to a rise in prices. This is the normal “demand and supply” laws that govern any market. The reason things went so bad so quickly in real estate over the past five years if because people created a false demand for housing.

The decision depends largely on the state where your property is located. If consumer protection statutes are in force, known as anti-deficiency laws then the homeowner is protected. It means the bank can take the house and nothing more.

Otherwise in the case of a deficiency law the bank can pursue the previous house owner for dues for as long as twenty years and seize any assets accrued. To do this the bank has to get a court order within a stipulated period, generally seven years and then hound the borrower.

The banks usually do not follow up because it means expenses to get the court order and follow up the chase. Considering the fact that foreclosure or short-sale has reduced the person or the family to a state of penury the chase is not worth it. But lately with the banks facing cash crunch there is a tendency to follow up the matter and haunt the borrower perhaps to the end of the world for dues pending.

The question of walking away arises for those who have gone underwater – the worth of their house being less than the loan due amount. As such it is not worthwhile for them to carry on with the mortgage; so they decide to walk away. Alternatively they might endure foreclosure or perhaps opt for short sale. In either case the sale money is short of the loan due amount. It is this amount that the bank can run after.

To avoid it – at the time of foreclosure or short sale the borrower should get it in writing from the bank that the latter will not claim further dues.

The consumer protection laws apply to a single family home that is the prime residence of the owner who is in occupation of it. In California the Code of Civil Procedure (580b) bans deficiency judgment. Lately statutes along these lines have been enforced in many other states.

Another point to be aware of is that this deficiency protection is only the first loan – junior loan holders are free to chase the borrower. Further it is applicable only to persons and not to corporations.

Having taking into consideration all these pros and cons the final decision about walking away is a personal one pertaining to the strong bonds and love for the property and the hope that if one stays on perhaps in the near future the market will recover – as it always has.

The biggest difference between the two contracts is what you are buying. In an Option to Buy contract, you are not obligating yourself to actually purchase the property. You are paying for an Option to purchase the property at a specific price at a predetermined time in the future. But you are not obligated to complete this purchase.

The way a normal Option to Buy contract works is you would approach a seller of a piece of real property. They may be asking $200,000.00 for the property. After speaking with them, you find out that the absolute bottom number they would take for the property is $160,000.00. That is an attractive price to you because it is below market value and you know you can sell it fast for a quick profit. So what you do is offer the seller an Option to Buy contract. You tell the seller you will pay him $100 for the right to buy that property for $175,000 within the next ninety days. You are not obligated to purchase the property. If you do not exercise your option then you would lose your $100 but that’s it. You tell the seller they can keep marketing the property and trying to get $200,000 and if they do, then it is your loss.

Seller’s love these proposals because it is no risk to them. They get $100 and can keep trying to sell their property on their own. Worst case scenario for the seller is if they don’t sell it on their own then there is a chance you may buy it from them in ninety days for a price they can live with.

Now having this Option to Buy gives you certain rights in the property, the biggest of which is it gives you control over the property. You have a type of ownership interest in this property now. That interest allows you to do several things. The first thing it allows you to do is market the property. You do NOT need a real estate agent’s license to sell your own property. If you have an option to buy contract on a property, you have an ownership interest in that property that you can freely sell and market.

The goal is during that ninety day option period is to market the property and find a buyer willing to pay you for your option. So here we have a house that you can buy for $160,000. You find a buyer who is willing to pay $175,000 for the house. You sell them your option to buy at $160,000 for $15,000. You now are out of the deal, you have made your money and the person you sold the option to will end up owning the property for $175,000. You turned a $100 investment into $15,000!

With a more traditional Purchase and Sale Agreement, you are entering into a contract to definitely buy the property at a set price, normally within thirty days. You will most likely have to make a larger down payment (at least $1000) and if you fail to purchase the property then that down payment is lost. This is the type of contract that most people are familiar with and is used thousands of times a day. So what benefit does it give to a real estate investor to use this type of contract over an Option to Buy?

The biggest benefit is if you are purchasing short sales. Lenders over the past several years have completely stopped accepting property offers for short sales that are written on option contracts. The reason is they now these types of contracts are used by investors and they do not want investors buying short sales and reselling them. Why? That’s an entirely other article because it makes no sense. But for now understand that if you submit a short sale offer for $150,000 to a lender using an Purchase and Sale agreement and it gets approved, that same EXACT offer written on an Option to Buy contract will 99% of the time be denied.

So if you want to lock up the property right now and not take a chance on anyone else coming in and buying it, then use a Purchase and Sale Agreement. If you want to shop the property first and see if you can make some quick cash selling your option then use and Option to Buy Contract.

An employee of Wells Fargo who described herself as a specialist in legal processing together with a colleague of hers presented a picture of what goes inside the infantry division of Wells Fargo in Charlotte downtown even after the much hyped February Settlement. The employee did not disclose her name but the allegations she made were supported by documents she produced.

In small cubicles dozens of these foot soldiers engaged in foreclosure processing peer into computer screens and prepare notarized affidavits. They sign these swearing themselves (under risk of perjury) to be vice presidents of Wells Fargo. They have to complete per day a minimum of ten to eleven files. If they lag behind warnings are given – first verbally and then in writing. If there are two written warnings the job goes, the salary cheque stops and the family starves. The same punishment awaits them if mistakes are made; considering the volume of work – mistakes are not surprising.

The unidentified worker disclosed to the media more startling facts. Many families were refused modification of loans only after a superficial brief interview. Others who had been asked to send repeatedly related papers had done so but the fax machine where these were delivered remained unattended for weeks on end. Some others were foreclosed upon for falling back on interest amounting to meagre $1.18! Small mistakes? Perhaps but these led to the big loss of homes and houses of families – loss that cannot be counted in figures. There were gross lapses too – most of the files showed that the banks did not have any legal standing to foreclose at all.

Lenders are however not willing to admit their short comings saying that these mistakes were rare. But Judge Arthur Schack of Supreme Court of New York State has pointed his finger at the entire system being defective. He added that unless this was challenged this state of things, with homeowners at the receiving end, would continue. Things were worse in the non-judicial states like California where to foreclose the lender did not have to take the permission of the court; the onus of challenging it was with the homeowner – a tiny David against the might of Goliath.