On average, a foreclosure reduces the value of a house by 27%, says a new paper from an economist at the Massachusetts Institute of Technology and researchers at Harvard University.

In the study, which is due for publication in the American Economic Review, MIT economist Parag Pathak and Harvard researchers John Y. Campbell and Stefano Giglio conclude that a foreclosure puts a much bigger dent in a home’s value, compared to a forced sale as a result of bankruptcy or the death of the owner.

Mr. Pathak says he’s not surprised that there’s a discount due to foreclosure, but says, “It is surprising that it’s so large,” according to a press release. The paper uses data on house transactions in the state of Massachusetts over the last 20 years.

There’s room for another national player in title insurance, according to Patrick Stone, president and CEO of a startup that aims to join the ranks of the big four title insurers before the end of the decade.

Based in Lake Oswego, Ore., WFG National Title Insurance Co. has grown rapidly by acquiring other companies, employing nearly 200 workers nationally. WFG was licensed to do business in 33 states just six months after launch, and plans to be in more than 40 by the end of the year.

“The market is very underserved in the sense that the industry has not changed or adapted to market-driven changes that Realtors and lenders have had to adapt to,” Stone said.

via inman.com

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Lexology – A deed-in-lieu of foreclosure is a valuable tool, but exercise caution

July 26, 2010 admin

A Deed-in-Lieu of Foreclosure Is a Valuable Tool, But Exercise Caution

The current recession, which real estate professionals might be more inclined to call a depression, likely will continue generating an almost bottomless supply of mortgage defaults for several years to come. Consequently, we can expect to see an increasing number of cases in which mortgage lenders and borrowers may consider a deed-in-lieu of foreclosure as a way out of the foreclosure process.

A deed-in-lieu of foreclosure can have significant benefits for both parties. For lenders, it helps avoid or reduce the delay, expense and possible uncertainty of going through the foreclosure process. For borrowers, it can eliminate or reduce the embarrassment of a public foreclosure sale and provide a resolution of personal liability and guarantee issues with respect to the debt.

On the other hand, deed-in-lieu transactions pose risks to the lender and will have tax consequences for both parties. Therefore it is important that both parties consult experienced legal counsel and tax advisors in connection with the transaction.

via lexology.com

Posted via email from Title Insurance
Continuing Ed for Title Agents