So, you think “a contract is a contract, a deal’s a deal.” Not in housing, it isn’t.
Delinquent borrowers facing foreclosure are learning that they can stay in their homes for years, as long as they’re willing to put up a fight.
Among the tactics: Challenging the bank’s actions, waiting to file paperwork right up until the deadline, requesting the lender dig up original paperwork or, in some extreme cases, declaring bankruptcy.
Nationwide, the average time it takes to process a foreclosure — from the first missed payment to the final foreclosure auction — has climbed to 674 days from 253 days just four years ago, according to LPS Applied Analytics.
In Florida, it takes over 1,000 days.
Under these conditions, lenders do not want to foreclose. Why not? Because they do not want to spend the money on legal fees. They figure that they have owners in the houses. The owners are likely to take care of it. What if it is empty? Squatters will move in. Whast if owners fight it? Legal fees will rise. The lenders might lose if they can’t prove they own the deed.
If an owner was paying $2,000 a month mortgage, delaying for three years is worth $72,000 before taxes.
This about this:
And while some borrowers are looking for ways to make good with lenders and get their homes back, many aren’t paying a dime. Nearly 40% of homeowners in default have not made a payment in at least two years, according to LPS.
They are doing this self-consciously.
Some lenders messed up, big-time.
Ironically enough, the banks have given delinquent borrowers some of the ammunition they need to delay the foreclosure process. During the “robo-signing” scandal in 2010, it was revealed that bank employees signed paperwork attesting to facts they had no personal knowledge of. Now, borrowers are routinely challenging that paperwork.
A Staten Island, N.Y. man who owed $300,000 on his mortgage and hadn’t made a payment in two years, said his attorney used the robo-signing issue to fight his foreclosure.
In his case, the lender’s paperwork included many different papers signed by the same employee. The problem was that the signatures didn’t match. The judge dismissed the lender’s case against the borrower, although it can be re-filed.
He just got a windfall of $300,000. I wonder if the IRS will demand its share.
Sometimes just asking the bank to produce the paperwork that shows it is the legal holder of the mortgage note can stall a repossession, said attorney Robert Brown. Since mortgages are often transferred electronically, the official paperwork often gets lost.
If an owner declares bankruptcy, creditors must stop all procedings. This can delay the foreclosure for months.
The housing market has these homes in shadow inventory. They are not counted in the official statistics. When the foreclosures come at long last, these homes will depress existing prices.