Imagine for a moment that you’ve fallen on hard times. You’ve gotten one, two, or maybe more payments than you can count behind on your mortgage. Your bank or mortgage lender has contacted you over and over, threatening you with talk of a foreclosure. You’ve even been told to expect a foreclosure sale in the coming month. The odd thing is, nothing has happened.
You’re left scratching your head, with no clue what’s actually going to happen, without hearing a peep recently from the same lenders who’s been threatening to take your home for months.
According to real estate industry analyst Sean O'Toole, in this situation you may have had a lucky turn on what he calls the "Foreclosure Roulette." What does this mean?
According to Arthur Delaney of The Huffington Post, “Banks don't want to recognize losses by having to put homes on the market at foreclosure-sale prices, but they don't want to encourage borrowers to quit making payments either, so, O'Toole believes, they randomly foreclose on some people to prevent widespread ‘moral hazard.’ The rest are left hanging with the help of the government's "extend and pretend" approach to the collapse of the housing bubble.”
This type of property ‘purgatory’ is affecting many Americans, including those who have tried to work with banks to modify mortgages under the Obama administration's Home Affordable Modification Program—a program meant to place eligible borrowers into a three-month trial period before making the modification "permanent" for five years. For some homeowners, this ‘trial period’ drags on much longer than the three-month window, only to followed by a unexplained rejection letter from banks and a great deal of anxiety as they wait for the bank’s next fateful move.
As Delaney reports, the anxiety may last a while. “The average foreclosure now takes 469 days, according to Lender Processing Services, whereas it took 319 days at the beginning of 2009. Many industry analysts say that is due to the Troubled Asset Relief Program, HAMP, and federal accounting-rule changes. ‘We weakened accounting standards to allow banks to keep non-paying mortgages in their books at full value," wrote economist Dean Baker, co-director of the progressive Center for Economic and Policy Research. ‘Banks also know that they are looking at glutted markets right now, so they have little incentive to take possession of a home and then try to sell it. And, the HAMP and other programs mostly delay foreclosures and hand money to banks, instead of keeping people in their homes.’”
An additional offshoot of this treacherous tactic of delaying foreclosures is the additional expectation that home prices will drop and bank’s refusal to enact a “foreclose and sell” strategy may stall the market and add to the number of strategic defaults. These unseemly practices are causing many lawmakers to call for bankruptcy judges “to write down mortgage principal (a process sometimes known as ‘cramdown’).”
Until things turn around, don’t sit and wait for your own personal housing bubble to burst. Join the millions of American homeowners who have found immediate help to keep (or flee) their hard-hit homes. If you have been harmed financially by the lingering housing crisis, knowing a qualified bankruptcy attorney can help you to conquer your creditors and face your economic fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.” The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-888-234-4181, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.