Help! Am I being jerked around on REO?

[Sherry W.]

Here's my situation--found an REO over the weekend newly listed on the MLS (2days). It's exactly what I want--I know the townhouse, the area, etc, and a great price. My realtor calls selling realtor, apparently there is an all cash offer. We submit my offer, no contingencies, selling agent submits to bank, which is Wells Fargo for Homesteps (Freddie Mac). They counter with addendums, all of which are acceptable. I sign and return these via my agent on Friday. Today is Monday (Columbus Day) and all banks and federal offices are closed. The selling agent's assistant sends an email at 3:00 saying "We have been notified that there are complex title issues, would the buyer like us to keep her contract on file, or send the earnest money back?". Apparently, the property is no longer in the Homesteps system due to the title issues. Selling agent won't return calls. I was supposed to recieve the MEC Tuesday when the bank signed it. What is going on, in your experienced opinions? Don't I have some sort of recourse, as the bank/Homesteps sent a counteroffer, which I signed and faxed back?

[Jon Holdman]

This is part for the course with REOs. Friend of mine made an offer on one, only to have the property withdrawn. The "title issue" in that case? The bank had foreclosed on a second mortgage and failed to notify the first. The first mortgage was still in place.

Perhaps you've heard on the news about Chase, GMAC and others holding off on foreclosure because of possible issues with the foreclosure paperwork. Seems this is extending to REOs, too. Banks seem to be concerned that even properties they have already foreclosed on may have issues.

Even before that delays and problems were common on REOs.

The most likely outcome of getting attached to a REO is to get your heart broken. Last REO I bought, before all this latest chaos required over 20 offers. I'd make two or three a week, week after week. In the end I had ONE accepted.