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THE LIMBO OF THOSE ENDURING DELAYED FORECLOSURES

Under "normal circumstances," IL Foreclosures take about nine months to one year to run their course - from the first court filing of mortgage delinquency, until the homeowner if finally evicted and forced to leave their home. For many homeowners in distress, however, circumstances here are far from normal. Indeed, it is not unusual for some homeowners who haven't made a mortgage payment in two to three years to still be in their homes, waiting to be forced to leave.

Many blame the record high levels of pending foreclosures on the high level of distressed inventory that has come to market since the collapse of the housing boom, traced back around Chicago to mid-2006. Banks are just too overloaded to proceed with foreclosure in a timely manner.

The Robo Signing Scandal, identified in 2010, targeted lenders who were sloppily rushing through foreclosure paperwork on thousands of delinquent mortgage loans, without thorough supervisory review or completely following statutory time requirements. The lenders' behavior was the subject of a massive court settlement impacting homeowners facing foreclosure all over the U.S. this year.

Casual observers may seem envious of those homeowners in the midst of a foreclosure delayed - without paying their monthly house payments, these distressed homeowners often attempt to pay down their remaining debt during their waiting time. But they continue to stress over their inevitable eviction - they don't usually know exactly when their forced move-out will take place.

From the perspective of the lenders against which the homeowners have defaulted, delinquent mortgages are assets not performing, and not providing a return to the lender. In addition, foreclosed homes on a block tend to draw down neighborhood property values - many who know eviction is imminent, eventually, refrain from performing normal maintenance on their soon-to-be-former homes.

According to Reporter Kathleen Lynn of The Bergen County (New Jersey) Record, as published in The Chicago Tribune, the average time between the day the lender starts the foreclosure process and the eventual eviction of the delinquent homeowner in NJ can take 2 1/2 years.

Most of today's homeowners who fell delinquent either leveraged too much to purchase their home originally, or borrowed too much against it with the easy Cash Out Refinances and Equity Lines of Credit easily available up until a couple of years ago. Monthly payments increased, leaving little wiggle room for many as the economy slowed and jobs withered as early as 2007. When property values began to slide at about the same time, sale or refinancing became tougher, then impossible, for many.

Some considering the Short Sale route - trying to sell the property for less than what is owed on the mortgage, with the bank's blessing. Others sought Loan Modification, too many times unsuccessfully. Also, lenders do not accept partial payments on a delinquent home loan - doing so will considerably delay a potential foreclosure.

Seeing no other logical option, a growing number have tended to stay in their homes as long as they can, accepting the severe credit consequences that can prevent purchase of a new home for seven years or more.

In the end, when they are forced to leave the home where many have lived and often raised their families in for many years, the only option is renting, and a long period of credit rebuilding. For many, however, the dream of returning to the comparative normalcy of owning their own home might be a long, elusive way off.

Please see our post today via BlogChicagoHomes.com.

DEAN & DEAN'S TEAM CHICAGO

Comment balloon 1 commentDean Moss • March 05 2012 08:15PM
THE LIMBO OF THOSE ENDURING DELAYED FORECLOSURES
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Under "normal circumstances, " IL Foreclosures take about nine months to one year to run their course - from the first court filing of mortgage delinquency, until the homeowner if finally evicted and forced to leave their home. For many… more