SO--"have you/would you" buy a foreclosure?"--If you bought a foreclosed property, then found...

[2lilsweetfoxes]

You buy a foreclosed property to be your primary residence.  You move your family in and begin to make it your home.  Some time later, it comes to light that the property, for whatever reason, should never have been foreclosed on.  Essentially, the house could be considered "stolen" from the original owner.*  The original owner would like it back. How would you react?  Would your answer change if the bank was offering to buy you out--because they are the ones who made the error--versus if you might just get "thrown out onto the street"?  Would it change if it was "just a house" versus this house is everything we want?  How about if no one was forcing you to give it back?

*original owner means the person who owned the house when the illegal foreclosure happened.

[Irishmommy]

If I wasn't going to be out hundreds of thousands of dollars, I'd go househunting again.

[Lucy Alden]

We'd give it back because its the right thing to do.  However, I would expect to be heavily compensated by the lending institution that made the mistake.  Not just for the home improvements but for the aggravation of having to look for a new home, moving costs, rent while looking, etc.  They're the ones that would need to make it right for both the previous owner as well as the current owner.

[beebalmmama]

Originally Posted by Lucy Alden 

We'd give it back because its the right thing to do.  However, I would expect to be heavily compensated by the lending institution that made the mistake.  Not just for the home improvements but for the aggravation of having to look for a new home, moving costs, rent while looking, etc.  They're the ones that would need to make it right for both the previous owner as well as the current owner.

This is what I think I would be inclined to do. But I agree with this, the banik should be compensating you for any losses. That's a tough one.

[Mulvah]

Originally Posted by beebalmmama 

Originally Posted by Lucy Alden 

We'd give it back because its the right thing to do.  However, I would expect to be heavily compensated by the lending institution that made the mistake.  Not just for the home improvements but for the aggravation of having to look for a new home, moving costs, rent while looking, etc.  They're the ones that would need to make it right for both the previous owner as well as the current owner.

This is what I think I would be inclined to do. But I agree with this, the banik should be compensating you for any losses. That's a tough one.

[Maluhia]

I think the ethical thing to do is go househunting again with the bank reimbursing your whole cost of this house's purchase and the costs of a realtor for the second house. 

[lookatreestar]

i couldn't stay in it. it just wouldn't feel right...

[swd12422]

What everyone else said. Even if the house is my dream home with everything I've ever wanted. I can't imagine wrongfully losing my home and not being able to get it back. On the flip side, if a family had been in "my" foreclosed-on home for a long time (IDK how long these things take to resolve) I might just let them stay and arrange with the bank that screwed up to compensate me in the quest for a different house. If the new family moved in, made repairs, remodeled, painted, etc. I don't think it would feel like "my" house anymore and I'd hate to have their hard work done for nothing.

[mich]

Another thought, In our state (and possibly others?) there was a flood of foreclosure that were not processed correctly. Meaning the owner was in default, was not paying their mortgage, but the legal paperwork was mis-handled. If this was the situation I'm not sure how I would feel about uprooting my life because a lawyer found a loophole.

Just a thought.

[Jane92]

The thing is -- I don't see the banks jumping in to take care of the new homeowners without being forced to by litigation.  When we looked at purchasing a foreclosure there were a number of items that made me uncomfortable.

First, we couldn't get the bank to deliver us a warranty deed for the home, only a quitclaim deed.  This meant that the bank was not providing us with their guaranty that the property did not have other liens on it and that the bank actually owned the home.   While we were told we could insure over that risk with an owner's title policy, I had a brief conversation with a friend who practices real estate law, and he felt that due to the pressures of the real estate fall-out title companies were no longer reliable.  In his opinion, while the owner's policy would be better than nothing, many title companies were refusing to honor claims out of hand and litigation to get them to pay up was extremely expensive. 

Seeing how much of a mess the banks have made of the foreclosure process it is a bit of relief to us now that our foreclosure purchase did not work out. 

[FiveLittleMonkeys]

We have some friends who were days away from closing and this happened to.  While they were kind of annoyed that they had gotten soclose to moving after a long house hunt (this was the third house deal that had fallen through for one reason or another) they were very relieved that it had happened before they closed.  This is a military town, and it turned out that it was wrongfully foreclosed upon during the soldier's deployment - the mortgage was current.

If it was us, we would turn over the property, but expect heavy compensation from the bank for the money WE invested in the property.