“If you can’t beat’em, join’em,” the old saying goes. These days, however, borrowers are opting for a variation on the axiom, choosing to at least “slow’em down” if they can’t actually beat their foreclosures. While most lenders cease foreclosure evictions around the holidays, all evidence points to a looming increase in foreclosure volumes over the coming year. However, the actual foreclosure process is likely to take nearly twice what it did in 2008, largely thanks to savvy delinquent borrowers using banks’ own shortcomings against them and demanding original paperwork, proof of note ownership and a variety of other evidence before bowing to the inevitable and forking over their keys and leaving their homes.
Homeowners have many options when it comes to stalling a foreclosure, and a stalwart delinquent borrower may be able to drag out the process for more than three years in some states. Not only can a homeowner demand proof of ownership of the note, production of original loan documents and a variety of related paperwork, but they can also declare bankruptcy, thereby stalling the process indefinitely. They’re not arguing whether or not they’ve been paying, says one lawyer who represents banks in foreclosure cases, but rather choosing to stay in the home “based on a technicality”. He further notes that most homeowners in default have not made a payment in at least two years.
But is this stalling really bad for neighborhoods? Opinions differ. Some argue that homeowners who know that they are going to lose their homes to foreclosure eventually do not care for their properties. They may allow maintenance issues to linger or opt not to repair cosmetic damages. They may even trash the property in an attempt to “get back” at the banks. But if those properties are swiftly and efficiently foreclosed, then sit empty for months or years, is that really any better? And some of these homeowners do actually end up being allowed to remain in their homes, technicality or not. For example, on Staten Island man owed $300,000 on his mortgage, hadn’t made a payment in years and successfully got his foreclosure dismissed thanks to robo-signing issues associated with the case. So sometimes, the homeowners actually “win.”
Do you think that this stalling is a serious issue? If banks get homeowners out fast, then should they have additional responsibilities related to their new property?
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