A Note about Buying a REO Property

The home I am buying is REO, Real Estate Owned property.  As I understand it, the home foreclosed on in May of 2010.  The home went to auction in July, 2010 and came on the market in November.  I spent time on the Suffolk County Register of Deeds and the City of Boston Assessors websites to try to stalk figure out who owns it and what they paid for it.  I am closing on the house this week (hopefully) and I still have NO idea who 'owns' the house.

I have a buyer's agent and she is in communication with the seller's agent.  The seller's agent works for a company and that company communicates with 'the bank' (dun dun dun).  Its a strangely convoluted situation.

But when we got the Purchase and Sales agreement from the seller's agent, it was a pretty hardcore agreement.  My sister is an attorney and I've been very fortunate to get her advice almost daily through this process.  My mortgage broker suggested I get an attorney to assist with the P&S and buying process.  Its $500-600 in addition to the fee the attorney will get for assisting my lender in the closing.  When I got the attorney's name, my sister recommend I ask her if she has experience working with foreclosures.  Shortly after I sent her an email asking that... I got a call from my mortgage broker saying the attorney recommended a different attorney who has foreclosure experience.  Yet another thing I'd recommend... its great to have someone on your team who has experience in foreclosures!

The attorney and I (with my sister on the phone) went over the P&S.  Essentially with an As-Is REO you are signing away everything.  I could have a Home Inspection and just walk away if I didn't like what I saw.  There was one line in the P&S that pretty much said that if another buyer was able to close before I did... the seller could go with that buyer and I would just get my deposit back.  But I would lose the 203k consultant fee, attorney fee, home inspector fee... yikes.  The other concerning portion of the P&S was a line that said that if the closing is delayed by me, I am assessed a fee of $100 per diem.

When you google info about 203k loans, there is a lot mentioned about how they typically take longer than a standard FHA loan.  With a typical loan, they go through every single financial aspect of your life.  With the 203k, the entire renovation write up is scrutinized and your GC needs to be approved.  So its a whole other level of paperwork.  Here is where I am fortunate to have my great team in place.  My 203k mortgage broker put me in contact with the loan processor.  She laid out the time lines of what we'd need to do to hit out deadlines.

I had provided my mortgage brokers with all of my info so far (W2s and copies of a years worth of bank statements showing rent payment).  But the 203k adds lots of extra steps (17 according to that website!  Dag!... I want to bring Dag! back FYI... use it...).  So I am under the gun with the $100/day fee looming.  I didn't yet realize the volume of paperwork to come (most of it for the GC) but having the 203k paperwork completed is vital for me to hit a 45 day closing date.
So long story short, my recommendations, make sure you have an experienced team behind you.  An attorney with foreclosure and 203k experience and a 203k team (mortgage, contractor and consultant).  Oh and a great sister who puts up with your questions, calms you down and gives great advice! :)