A major trend that is (sadly) happening all around us is the foreclosure process, which entails a long and drawn-out process which usually ends in the eviction of the current homeowners...or not!
Today, let's focus on the "or not!", and see what is really going on out there.
A recent CNN story written by Les Christie, titled, "Squatter Nation: 5 years with no mortgage payment", examined this in detail, and said that Nationwide, "it takes an average of 565 days to foreclose on borrowers in default from their first missed payments to the final auction. In New York, the average is 800 days". One such example of "Squatters", as they are referred to, is a Florida couple, that, "have not made a mortgage payment in nearly five years -- but they continue to live in their five-bedroom West Palm Beach, Fla. home.". I find that absolutely incredible !
As incredible as it may sound, this is not a new trend, says Patrick Hohman of Louisville, KY, who says that when his dad was a little boy, "they lived in their foreclosed home from 1933 to 1937. Due to the volume of foreclosures in the 1930s, they stayed in the home for 4 years before being put on the street."
Lesley A. Hoenig, a bankruptcy attorney practicing in Michigan, says that "the foreclosure process can take an insanely long time in some cases, especially if the owner has filed chapter 13 to catch up.", and that, "Ultimately, the lender may eventually kick the person out (Likely if the person isn't making any effort to get the loan modified or catch up)", and adds that, "until the number of foreclosures die down, people are going to be able to spend up to two or three years in their house before getting kicked out".
Hoenig thinks that the main reason people manage to stay in their house is, "because lenders aren't really itching to have vacant houses in their inventory.". Marc S Hyman JD, a Licensed Real Estate Agent in Santa Barbara CA, says basically the same thing; "The last thing a bank wants to do in this market is actually take possession of a home so banks are letting the foreclosure process drag out as much as possible.", he says, adding, "During a normal market banks foreclose quickly in order to get their "investment" back as soon as possible and put it back to work."
The reason Hyman provides is that in this market, "a bank does not want to own a home that it will need to maintain and insure. The bank will become responsible if anyone gets hurt while on the property. Furthermore a bank will not be able to sell the house quickly. Banks are looking at any solution that does not mean taking back the house.".
Hyman does say, though, that once it does complete the foreclosure, "it does quickly evict tenants in order to avoid the legal obligations of being a landlord eg timely repairs, insurance coverage etc.". Referring back to the Christie piece from CNN, one such "Squatter" says that, "Living in this foreclosure limbo is "Hell,"", and adds, "I feel like I'm locked in a box. I work for a financial organization and if this came out, it could cost me my job."
Ultimately, Hyman offers up this interesting point, and perhaps something for everyone to chew on; "The squatters are getting a longer break than in the past but it will come to an end.", and says that, "The sad thing is that the squatters are spending everything they are saving while living rent free. If they did not have the squatter mentality they would be saving the money and looking to buy somewhere else with the windfall they are getting by squatting."
Hyman makes a very good point. We need to realize that a lot of these "Squatters" are families (with children), who had been working hard for years to pay on time, until hardships arose with the Economic downturn. It does not make it right, but it's quite possible that this category of folks would never have imagined being in the foreclosure process and being a "Squatter". It seems as if the whole definition of everything we believe(d) in has taken a 180-degree turn. Tough Times!
What are your thoughts on this hot topic?
Have a Great Week, and Happy Rent-to-Owning !
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TAGS: #foreclosure #eviction #squatter #mortgage #foreclosureprocess #RealEstate