Experts: Law May Increase San Antonio Foreclosure Homes
August 25th, 2009 by 
Joseph Smith
Industry experts are concerned that a new law in Texas would lead to an increase in the number of San Antonio foreclosure homes. The House Bill 655, which is scheduled to take effect on September 1, could change the foreclosure sales procedures and may increase the number of foreclosure lawsuits.
Under the bill, the sale price at a foreclosure auction is not required to be paid immediately. Instead, if a buyer requested more time to pay the sale price, the trustee may agree with the purchaser’s request for additional time. The trustee is the person who conducts the foreclosure auction.
Industry experts said that what is wrong with the law is that it failed to provide necessary guidelines for making the agreement between the purchaser and the trustee. In fact, the law does not require that an agreement should be made between the trustee and buyer. What it gives is an option for the trustee to make an agreement with the buyer.
According to experts, before the introduction of this law, trustees’ role in any foreclosure sale is mostly administrative and did not involve decision-making. This means that trustees could not make any action without specific instructions or advice from lenders.
In a typical foreclosure auction, a trustee was required to send notices at specific times and auctions were required to take place in a specific day and time. The foreclosed property will be sold by bidding and anyone who could make the highest cash offer wins the property.
Under the new law, trustees are mandated to make decisions in determining reasonableness and negotiating agreements. This hinders lenders’ ability to give specific advice or instructions to trustees concerning which offers to accept because they would not know beforehand the requests made by buyers.
The law would benefit buyers because it provides that they be given a reasonable period of time to obtain the cash necessary to close the deal.
But industry experts are worried that the new law could give buyers a viable tool to file legal actions against trustees in the event that they failed to win a bid at foreclosure auctions. This means that potential buyers could claim that trustees unreasonably refused to negotiate with them.
