Lenders increasingly allow the foreclosed to stay

[xchrom]

http://www.msnbc.msn.com/id/46620674/ns/business-us_business/

ORLANDO, Fla. — Forced by the harsh realities of the real estate market, lenders are increasingly likely to allow defaulting owners to remain in their homes — a change in attitude and strategy that is helping to buoy some neighborhoods while further slowing the nation’s foreclosure process.

Some lenders are now willing to make deals with owners to let them stay after defaulting, offering to pay home insurance, for example, while the resident pays for utilities. Other lenders simply look the other way, quietly putting off foreclosure sale dates, knowing that the costs of the ordeal probably exceed the diminishing value of the properties.

The evolution in thinking was perhaps inevitable, experts say. Across the country, more than 644,458 properties were lingering in bank ownership at the end of January, but even more — some 710,725 — were coming down the foreclosure pipeline, according to RealtyTrac, a real estate and foreclosure analysis firm.

In addition, states and municipalities have grown more aggressive in the last few months in trying to force banks to maintain foreclosed properties, which have become blights on neighborhoods from coast to coast. Last month, lawmakers in Florida and courts in New York considered new ways to require lenders to alter loans to keep people in their homes or complete foreclosures more quickly.

“Under normal circumstances, the banks would be able to cover the cost of maintenance, upkeep and property taxes by just reselling the property, but these are desperate times, and banks are resorting to somewhat desperate measures in some cases,” said Daren Blomquist, a vice president at RealtyTrac, a real estate analysis firm. “It is more of a factor now because property values have come down and will not cover all these costs when the banks resell the property, if they can resell the property.” When the housing bubble burst almost six years ago, millions of Americans were forced to vacate their homes within months of defaulting, in a system that worked like an eviction mill, often resulting in vandalized properties and bitter feelings between banks and borrowers.

[elleng]

1. As well they should.

[OneGrassRoot]

2. Thank you. K&R n/t

[Warpy]

3. It took them long enough!

They had to do the same thing in the Depression. You'd think they'd have remembered that part, at least.

[lacrew]

4. Makes Sense

Somebody is still at the house, keeping it maintained, pest free, and heated/air conditioned....and at some point in the future, these borrowers may once again be able to make payments (ready made purchasers for the property vs foreclosure).

I'm not sure what the banks were thinking, with aggressive foreclosures. I know of alot of properties, which just sit empty. Lots of things can go wrong in an empty house. One example I actually went and took a tour of - an $80,000 house had become so over-run with mold, the realtor was trying to list it for $20,000. Every bit of the sheetrock has to come out of that house. What happened? No power means no sump pump, and the basement became a mold factory.