I'm a Realtor in Texas and mostly deal with listing foreclosure properties for banks, having worked for Chase, Bank of America, Fannie Mae, and other investment firms to move their foreclosures to market.
The way they work it is that the Realtor ends up being the bank's "agent" at the eviction itself, which is probably the absolute worst part of my job. Being there as everything a family owns is moved out of a house and onto the yard by a work crew I have to contract with, and the local sheriff or constable standing by to make sure everything goes well. It's heartbreaking to be the person on the scene for that, and it's outrageous that the law doesn't require an actual bank representative be there to witness it.
But today we received notification that the Texas AG is taking steps concerning some foreclosures.
The text of the letter from the Texas Association of Realtors to their members:
FAQ: Texas AG action against banks with foreclosed properties
What is the Texas Attorney General doing regarding foreclosures?
Texas Attorney General Greg Abbott has sent a demand letter to 30 mortgage banking and servicing institutions asking that these institutions immediately "suspend all foreclosures, all sales of properties previously foreclosed upon, and all evictions of persons residing in previously foreclosed upon properties" until these institutions have taken eight specific steps to rectify possible past errors in mortgage documents.
Read the AG’s demand letter
See the list of banks
What is a demand letter?
A demand letter is a tool lawyers use to ask someone to do something. The demand letter by itself does not have the force and effect of law. A demand letter typically will describe possible future legal action against the recipient of the letter if the recipient does not take crtain actions. In this case, Texas Attorney General Abbott has noted possible violation by these banking institutions of the Texas Deceptive Trade Practices Act, the Texas Debt Collection Act, the Texas Penal Code, the Texas Property Code, the Texas Government Code, and the Texas Constitution.
How will the banks respond?
We don’t know how individual banks will respond to the demand letter. Anecdotally, we’ve been told that some banks had already halted foreclosures due to concerns about the accuracy of documents and the integrity of the loan servicing and administration of the foreclosure process. The Houston Chronicle reported on Oct. 6 that some banks will not honor the AG’s request.
How will the demand letter affect current transactions?
If an institution chooses not to respond to or honor the demand letter, then the transaction should proceed as if no demand letter had been sent.
If an institution chooses to respond to the demand letter, then the transaction could be affected in various ways:
Foreclosures: Institutions that honor the AG’s request will likely postpone foreclosures that have already been posted and will likely not post additional foreclosures until the dispute has been resolved.
Foreclosed properties that are listed for sale: Institutions that honor the AG’s request will likely not enter into a sales contract for a listed foreclosure until the dispute has been resolved.
Foreclosed properties that are under contract for sale: Institutions that honor the AG’s request may delay closing a sales contract for a listed foreclosure under contract until the dispute has been resolved.
Short sales: Institutions that honor the AG’s request may choose to delay closing on a pending short-sale transaction until the dispute has been resolved.
Evictions of persons residing in previously foreclosed upon properties: Institutions that honor the AG’s request will likely not evict previous homeowners who continue to live in the foreclosed house until the dispute has been resolved. The institutions could, however, attempt to convince the occupant to leave the property by offering cash for keys. (Diarist note: the vast majority of occupied foreclosed on homes I get the occupant accepts a cash-for-keys arrangement and voluntarily quits the property).
Commercial vs. residential properties: The demand letter makes no distinction between commercial and residential properties.
What does the demand letter mean regarding Texas REALTOR® liability?
The demand letter should have no effect on Texas REALTOR® liability for individual transactions. The REALTOR® remains an agent of and fiduciary to the REALTOR®’s client. The demand letter does not change this relationship.