In light of the Home Equity Theft Prevention Act, is anyone currently buying pre-foreclosures in NY? I am confident that I can comply with the act, but the title insurance companies, as far as I can tell, will not insure title. This rules out the possibility of quickly rehabbing and selling to a retail purchaser (who will require title insurance).
My question, specifically, is whether anyone knows of a title insurance co. that will insure title to a home bought in pre-foreclosure by an investor? If not, does anyone have any creative ideas to address this? All I can think of is renting out the properties for two years until the seller’s recision right lapses and title becomes insurable. The problem is, many properties facing foreclosure in my area wouldn’t make good rentals.
For those non-NYers unfamiliar with this law, it basically says that if an investor buys a home facing foreclosure and you don’t provide all the notices and info required by the act, the seller can rescind the contract and get back the house within two years. The law has even harsher requirements if the contract contains a reconveyance arrangement.
Hey Scott, How are you I am also in Ny and from my understanding all that is required is that if you are an equity purchaser all you need to do and buying either subject to or out right purchasing all you need to do is give the homeowner 5 business day after signing the right to bnack out if i am correct,and if that requirement is met why would they have a problem insuring title. keep searching. P.S. where are you from in ny i am from westchester.
I am also in Ny and I feel it’s VERY important for every investor in NY to know this law, so I thought I would post the link /www.banking.state.ny.us/hetpyrul.pdf I have a feeling this law will be expanded to ALL investment properties purchased under market value.
I love NY!
Nextdeal, I’m located in upstate NY though I used to live in White Plains. How are things going down there?
The law basically says that the seller can reverse the transaction for two years if you didn’t comply with certain sections and each of those sections contains requirements. The problem is that not all these requirements are easy to verify. That is why title companies have a problem. There is no way for them to be certain whether you complied.
Mcprops is correct that everyone should become familiar with this, certainly if you are in NYS. And if you are even considering doing one of these deals you should read the actual text of the statute (you can find it on the NY state senate/assembly website). You need to understand every single word and if you don’t you need to talk to an attorney before doing a deal on a home in pre-foreclosure. You then need to go through the statute and make yourself a checklist so that you can be sure you are in compliance with every requirement. I would also have your attorney prepare a sworn affidavit to be completed by the seller stating that you did everything the statute requires you to do.