Banks have recently frozen all foreclosure proceedings to protect homeowners from the robo signing process, which is the process of signing foreclosure documents without checking their veracity. But the recent flurry of mortgage fraud accusations is not only hurting homeowners, but the title companies as well. And title companies are now implementing rules that aim at protecting themselves.

Title companies are making it harder to write policies for the foreclosed properties. Stewart Title of Houston is just one of those companies; it has set new rules regarding sales of foreclosed homes. The company recently issued to its agents guidelines that will make it harder to write policies on foreclosed properties by GMAC Mortgage, JPMorgan Chase, Bank of America, and OneWest Bank.

Texas Attorney General Greg Abbott asked loan companies to suspend all foreclosure activities. A week later, Houston-based Stewart Title decided to make the change in policies.

Some property sellers are now expressing concerns. Michael Weaster, who has sold foreclosed properties in the last thirty years, is just one of them.

“The problem with the current issues with Bank of America, with what’s going on with the moratorium, all its going to do in my opinion is create a larger inventory of vacant foreclosed homes. We’re not just losing individual homeowners. A lot of the developers have gone under because they couldn’t find buyers. It’s affecting the title industry, the yard people, the sign people, the lock people. It’s affecting a lot of industries,” says Weaster.

The recent foreclosure freezing does prove to be making an impact on foreclosure sales. The Houston Association of Realtors has released the August data on foreclosure sales in the Houston area. The number has dropped to 830 this year from last year’s 850 sold homes.

Weaster says the freeze has a potential for long lasting effects on foreclosed properties. He explains, “What’s happening is you’ve got buyers going, ‘Well, I don’t know if I should buy that foreclosure. Am I gonna be able to sell it? Is there a title defect? What’s to happen a year from now, (if) I want to sell the property, but I can’t because I don’t have a clean title?’ That’s not going to be the case, but that’s what everyone is fearful of.”