Buyers anxiously await foreclosure deals to go through
Friday, October 8, 2010; 10:55 PM
Since lenders began halting foreclosure sales elsewhere in the country, Peter Guarino has nervously been calling his real estate agent several times a week to ask what's become of the Burtonsville condominium he snagged at an auction on the courthouse steps in August.
Guarino has ponied up $30,000 for a down payment to buy the foreclosed property. He's signed a contract and now, before heading to settlement, he's waiting for final court approval - unsure whether he will get his money back if the deal fails.
"I thought it was sure thing," he said, "but now I feel so vulnerable."
Although recent steps by banks and government officials to freeze foreclosure sales have primarily affected real estate outside the Washington region, the spreading crisis is also casting a pall on the local market.
Like Guarino, some area residents are increasingly anxious about contracts they've signed to buy foreclosed homes. A few in the Washington region have seen their deals put on ice. And others have decided to no longer consider foreclosures as they go about house hunting.
The initial measures by U.S. financial firms to freeze foreclosure sales - taken amid reports that at least several banks have used botched and fraudulent paperwork to evict people - have most severely affected those states where lenders need a court order to sell a home.
That's not required in Maryland, Virginia or the District, yet a chill is already affecting local sales. And a complete moratorium seemed much closer in the Washington region Friday after Bank of America became the first lender to announce that it would suspend foreclosure sales and proceedings nationwide.
In the region, 14,000 foreclosed homes were listed for sale by real estate agents, according to the most recent data available from Realty Trac.
Nick Chaconas, a Maryland real estate agent, said he was one week from completing a foreclosure deal for one client, who was buying a $470,000 fixer-upper in Potomac, when an e-mail arrived putting the deal on the skids.
The e-mail, from the title insurance company involved in the deal, said the mortgage lender PNC was suspending foreclosure sales for at least 30 days "due to a review being undertaken on all foreclosure files."
"My initial reaction was, like, damn," said Chaconas, a Redfin agent. "Everything was going so smoothly. Now the underlying feeling is caution. Extreme caution."
He said his client does not plan on walking away from the deal if he can help it. "But it's frustrating and disappointing," he said.