Information on Foreclosure Too Dated to Be Useful

Don’t get excited about reading “How to Buy Foreclosed Real Estate” by Theodore J. Dallow. The book is out of touch with the realities of buying foreclosure properties today. For example, the book refers to the Resolution Trust Corp., a government agency that took over savings and loan assets and went out of business years ago.

Dallow, who owns three Century 21 real estate offices on Long Island, was once obviously in tune with the New York foreclosure market, as he managed U.S. Department of Housing and Urban Development foreclosed properties. But the market has changed greatly since then, and Dallow’s book has not kept pace.

Although written for a national audience, this book only explains New York mortgage foreclosure procedures. Dallow never refers to the different foreclosure procedures for deeds of trust, and detailed foreclosure procedures are missing. He also says there are no borrower redemption rights, although this is incorrect in most mortgage foreclosures.

Foreclosure property buyers might learn something from reading this book, possibly making it worth the low price, but most readers will be incompletely informed.

For example, the author says buyers at foreclosure sales need only a 10% deposit. In most states, that is not correct. Foreclosure sale buyers usually must pay their full bid amount either at the sale or shortly thereafter.

Dallow also says foreclosure sale buyers can obtain title insurance. That’s news to me and other foreclosure buyers. Most title insurers won’t insure foreclosure titles because they can’t be certain that correct foreclosure procedures were followed.

The book’s approach is vague. Is it from the foreclosure property buyer’s viewpoint? Or is it written from the perspective of the defaulting borrower, who’s trying to avoid losing the home? The author seems uncertain.

Some of the book’s information is incorrect. To illustrate, the author says, “Banks are not permitted to make a profit on real estate sales.” But many lenders view their foreclosures as profit sources. There is nothing illegal, improper or immoral about a lender earning a profit on its foreclosures.

In another incorrect statement, Darrow says banks owning foreclosed property don’t own an assent.

“It is a liability,” he says. That is incorrect. Foreclosed property, called REO (real estate owned), is an asset on the lender’s financial statement.

This could have been a great book. The author obviously has many years of valuable experience in real estate brokerage and property management. But his recent experiences, especially considering his reference to the closed Resolution Trust Corp., seem limited. On my scale of one to 10, this disappointing new book rates only a 3.