What to Do About Bank Foreclosure Delays?

Foreclosure delays can be caused by banks and borrowers.

Foreclosure Delays Can Benefit the Homeowner

Delays in foreclosure proceedings can help a homeowner build up enough reserves to pay the lender any and all amounts in arrears and bring the mortgage up to date. This can stop the foreclosure process and become a win/win scenario for the lender and the borrower.

Delays Can Hurt the Lender

In situations where the borrower is stalling foreclosure using bankruptcy or temporary restraining orders when there is no hope of regaining financial solvency in the near future, the lender will have to continue to write off losses for a longer period of time as opposed to being able to foreclose and resell the property.

Bottom Line

Some foreclosure delays can be avoided if the lender takes the appropriate steps during the foreclosure process. While this does not benefit the borrower in most cases, it does allow for the property to be resold and helps an overall recovery of values in the neighborhood over time.

References

• Bank Foreclosure Listings: Delay the Coming of Foreclosure
• American Banker: Foreclosure Delays
• All Business: Freddie Mac mandates 90-day foreclosure delay to returning servicemembers.