I wanted to share a personal story with everyone that more or less underscores what I believe the biggest problem with our industry is.

My wife's cousin is purchasing a foreclosed property. No problem for this 24 year old recent graduate. He's a civil engineer and makes plenty of money, but.... after finding out where and how much, I of course started prying a little deeper.

Here is the back and forth that transpired;

1. Who did your appraisal? "The bank did the appraisal."

2. Who did your home inspection? "I didn't get one, I went through the house myself."

3. Did you get an owner's policy? "What's that?"

I wanted to take the lad outside and give him a solid beating. I reminded Joe that I had once held a title insurance license, a mortgage broker's license and a real estate license and asked him why on earth he did not call me first thing. His reply was, he forgot.

I then began telling him some of the intricacies of dealing with foreclosed properties and some of the pitfalls like term of vacancy, likely title claims and the current suits being brought by old owners against the banks themselves. Most importantly, I advised him the difference in an owner's policy versus a lender's policy. He advised me the bank was giving him $5,000 credit towards closing costs so it must be in there. Mind you the home is being sold for $98,000.

I guess it goes to show you how inept and complacent some people still are when making the biggest purchase of their life. He was beaming at his 4.25% interest rate and telling me how he was going to refinance after getting a new appraisal to wipe out his PMI. Then of course I went into mortgage broker mode and advised him of a little thing called underwriting guidelines and how appraisals works. He was sold on the idea of being able to refi instantly from some broker with a new appraisal showing an increased value.

Long story short, I offered to do his title work on the side for free to double check for him, I offered to review his HUD for him and go to his closing. No call whatsoever, my wife did however see a facebook post telling everyone he closed two days ago.

Part of me really wants to see a claim arise from the prior owners, and another part just wants to wish him well. Chances are, I will most likely hear about this house again at another family get-together in the coming years and of course I will remind him of another missed opportunity to become educated.