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Posted by on Dec 28, 2011 in Bailout, Fraud, Loan Mods, Protest, Scams, Shadow Inventory, Walkaways | 3 comments | Print Print

Free-Rent Program Extends

From cnnmoney.com (seen at CR):

NEW YORK (CNNMoney) — 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.

It takes much longer than that in Florida, where the process averages 1,027 days, nearly 3 years. In D.C., foreclosure averages 1,053 days and delinquent borrowers in New York often stay in their homes for an average of 906 days.

Because California is a trustee-sale state, the delays are shorter – only 11 months on average:

Days to Foreclose/Sell - California

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.

Many of these homeowners are staying in their homes based on a technicality. There is rarely any dispute over whether or not they have stopped paying their mortgage, said David Dunn, a partner at law firm Hogan Lovells in New York, who represents banks and other financial institutions in foreclosure cases.

“In my experience, they never say, ‘I’m not delinquent’ or ‘I want to pay my bill but I’m confused over who to send it to,’ or ‘Oh my God, you mean I didn’t pay my mortgage?’ They’re not in technical default. They’re in default because they’re not paying,” he said.

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.

“It looks like I’ll be in my home for some time to come,” said the homeowner, who asked to remain anonymous. He said he is currently not making any payments on his home.

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 misplaced.

“My lawyer asked my bank to produce an affidavit that entitled them to foreclose,” said a client of Brown’s, who lives in Harlem and also asked to remain anonymous. “They couldn’t do it.”

The case was dismissed, without prejudice, though the lender can try again — if it finds the paperwork.

In some of the more extreme cases, borrowers will file for bankruptcy in order to block a foreclosure. In these instances, courts order creditors to cease their collection activities immediately. Home auctions can be postponed as the bankruptcy plays out, which can take months.

The ensuing delays are further harming the housing market. People who stay in homes undergoing foreclosure for years often don’t maintain the properties, causing blight and lowering property values in the surrounding neighborhoods, said Dunn.

 

3 Comments

  1. I wonder how much lawyers change to file robo signing defense claims. At some point the legal fees aren’t worth the fight but for the time being it must be worth it.

  2. I bet many of the people using these tactics are the ones who refinanced a bunch of cash out of their houses and this is their second round.

    Imagine not having to pay rent or mortgage for years…. Is this the our new America?

    The occupy wall arresters protesting the banks while us tax payees pay for these squatters.

  3. One question unanswered who is paying the property taxes on these homes? It would seem that it might be cheaper for the lenders to stop paying and let the government foreclose, and buy it for the taxes owed. I do think the time frame for tax sales should be cut to 2.5 years i.e. if you don’t pay for 2 years the house goes to the government.

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