Lenders Turning Blind Eye to Overdue Payments

Overwhelmed banks taking much longer to foreclose on homes
By Matt Cantor,  Newser Staff
Posted Apr 4, 2008 4:24 PM CDT
Lenders Turning Blind Eye to Overdue Payments
Prospective buyer Marcia Coleman takes a last look at the home she just viewed during the Foreclosure Bus Tour in Orlando, Fla., Saturday March 15, 2008.    (AP Photo/Peter Cosgrove)

(Newser) – With foreclosures skyrocketing, overwhelmed mortgage lenders are turning a blind eye to homeowners who haven’t paid up, letting them live in their houses despite delinquency, Bloomberg reports. The 3.6% of borrowers at least 90 days behind is almost twice the percentage foreclosed upon. Lenders’ delays are skewing foreclosure records and means even more homes could soon clog a flooded market.

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“We don't have a sense of the magnitude of what's really going on because the whole process is being delayed,” one economist said. Homeowners are allowed to hang on for financial reasons, says an analyst: Foreclosures require legal fees, taxes and other payments from the lender—and “some banks just don’t want the houses to be empty,” says a seller, especially in foreclosure-riddled areas. (Read more borrowers stories.)

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