TX Attorney General Demands Suspension of Foreclosoures

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.

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?

The Houston Chronicle reported on Oct. 6 that some banks will not honor the AG’s request. 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.

Commercial vs. residential properties: The demand letter makes no distinction between commercial and residential properties.

Read the Demand Letter and see a list of banks below:
Letter from the Attorney General
List of Banks

Source: Texas Association of Realtors