A Springfield, MA Land Court judge's ruling that two banks improperly seized two properties in foreclosure has halted the sale of many bank-owned properties across the state, the Boston Herald reported June 9, 2009.
One local listing agent that sells mainly bank-owned properties told the Herald that, "It’s just stopped everything," and 12 of her sales have been halted since the ruling.
Due to the judge's decision, title insurance companies are not willing to write lender's or owner's title insurance policies. Without the availability of a lender's policy, lenders are not willing to provide financing on such deals.
I have a similar situation regarding a sale of a single-family home in Tewksbury, MA. My buyer agreed to purchase the property from an investor who bought the property from a bank. For the same reasons as in the Springfield court case, the property has a defective title. We are waiting for the outcome of the case.