As you fight to keep your home after defaulting on your mortgage payments, it can feel like the bank is completely unwilling to work with you, that they actually want to foreclose on you and take your home.
The reason is that foreclosure can cost the bank more effort and money than alternatives to it.
How long does a bank have to foreclose?
This new case essentially holds that a lender has five years from the date the last payment is due under a mortgage to file a foreclosure suit. Therefore, if the homeowner stops making payments on a 30 year loan after 5 years, the lender could feasibly have 35 years to bring a foreclosure action.
Can banks profit from foreclosures?
Banks are run like a business because they are a business looking to earn a profit. If it costs more to foreclose over agreeing to a short sale, the bank is very likely to favor the short sale. On the other hand, if the bank feels the real estate market may appreciate, a foreclosure may be a more profitable venture.
What happens if a bank won’t foreclose?
Banks will often refuse to foreclose if the HOA dues are sky-high and the property is worth much less than the balance owed on the mortgage. Plus, the banks have to pay for hazard insurance and taxes. This is especially a problem for luxury condos that can have HOA dues that equal or even exceed the mortgage payment.
How much does it cost a bank to foreclose?
Costs to Lender
When a lender forecloses, it must spend a large amount of money on the process of taking a house back and selling it. According to a 2008 survey by the Joint Economic Committee of Congress, lender pay an average of about $50,000 when a foreclosure takes place.