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Free Rent for Millions of Americans

Written by Gary North on December 30, 2011

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.

Continue Reading on money.cnn.com

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5 thoughts on “Free Rent for Millions of Americans

  1. OldNavyChief says:

    Let's hear it for Dodd-Frank!!

  2. Don't worry about free rent, the 50% of the people who actually pay Federal Income Taxes keep bailing out Fannie & Freddie for tens of $Billions Taxpayer's money, while the other 50% ride free!

    Stop giving houses to minorities who can't afford them!

  3. Two of the biggest reasons we are in this mess is Dodd & Frank!

  4. The biggest reason we're in this mess is greed.

    Greed from lenders who wanted more profits than were economically feasible or reasonable.

    Greed from buyers who wanted too much house.

    And poor government policies that acted in a coersive manner to force many lenders hands to lend the money they probably shouldn't have.

    There's plenty of blame to go around. I say, however, to the people fighting foreclosures that have questionable paperwork, terms, etc., go for it. Perhaps you can teach the banks a valuable lesson.

    To the banks: I heard a story on the news last night of a guy who tried for THREE years to get one of the big banks (I think Wells Fargo) to re-write his mortgage to make it more affordable when he and his wife had to take lower-paying jobs. The bank refused, he stopped paying so he could fall behind to become eligible for the re-write ( a stupid policy if you ask me,) and then lost his house. The bank, between the short-sale and assorted paperwork, lost a fortune. The calculated loss with a lower-interest/reduced principal mortgage was about half of that, plus they paid the guy $20,000 to move.

    Who's being dumb?

  5. <san Francisco Pete says:

    Why "minorities who can't afford it"? While some who can't afford it could be of a minority group, Good and proper English would prompt "anybody who can't afford it"! Your wording does show you as being a very prejudiced person.