Where’s my foreclosure notice?

People all over America are reporting that they’ve stopped paying their mortgage…and it’s been months…and they haven’t heard anything from the bank.

The banks are letting them live in their homes, mortgage free, for months…years.

“Eight months after my last payment to the bank, I am still waiting for the ax to fall.”


Because the bank has thousands of homes in foreclosure, thousands of homes about to be foreclosed on and thousands of homes with nobody living in them sitting out there.  This is their shadow inventory. Shadow inventory are homes the bank will not list “for sale” because it would bring down the value of surrounding homes, many of which the bank also owns now.  So they let those houses sit there off-the-market. 

So what is one step better than that?  Well, when someone stops paying their mortgage…the bank just doesn’t do anything about it.  That way, the bank doesn’t have to “deal” with the property and the costs of foreclosing on it and the home owner gets to live in the house, for free, presumably maintaining it.  This is a growing slice of shadow inventory.  Homes with people happily living in them, mortgage free.

Thousands and thousands of people will be left to live in their house…mortgage free…for months….years….because the banks are overwhelmed.  That is how many homes out there are truly in default.  Even a giant like Citi can’t muster the resources to foreclose on their own properties.

So, a couple issues with that.  First, how mad will eveyrone get who pays rent or their mortgage that these guys get to live in their houses for free?  Second, how mad will everyone get that all these homes being kept off the market are keeping the prices of homes artifically inflated, which keeps new home buyers in rentals…waiting. Third, what message does this send from the government?  It is a moral hazard to say it’s okay to take a gamble, and when you should lose something from the gamble, you win a house instead…and a free house at that.

Just one of several stories I’ve found…

“My own personal experience with Citi: We stopped paying our mortgage in April. So that is…six months with no payment. They call every 3-4 days (but lately have gone as much as 2 weeks without calling). I am not in foreclosure yet. They tell me they don’t know when they’ll start the foreclosure process, but that I’m “in danger” of foreclosure. Well, no crap. I’m amazed, as I was sure they’d start foreclosing way sooner than this.
Oh, and lately the calls from Citi have been recordings telling me to please hold for the next available person, but then it disconnects and I never talk to a person. This has happened probably the last 5-6 times I answered the phone.
I called Chase back in January, when I was 90 days past due. Another representative told me that I would automatically be evaluated for a loan modification.
“You should just wait until you hear from one of our negotiators,” he told me politely.
Another two months passed without anyone calling, so I tried again in late March.
“I’m sorry, but our analysts have been backed up,” yet another Chase rep told me, even more politely than the previous one. She said each analyst had about 500 distressed borrowers to deal with, and it had been taking about five weeks for customers to get a direct response. The delays seemed to be getting longer.
I was actually beginning to feel sorry for Chase. It seemed to be so flooded with defaulting borrowers that it didn’t have time to foreclose on my house. Eight months after my last payment to the bank, I am still waiting for the ax to fall.”

Categories: Government Failures, Housing Market

Tags: , , , , ,

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