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Comment by tomjakubowski

6 hours ago

> listened to a podcast recently that some 'homeowners' have not made a mortgage payment in years, have no ability to pay,

How? Somebody is holding the bag here on the mortgage - a bank, probably. And they are fine with not receiving payments? Or is somebody else making payments on the homeowner's behalf?

7 comments

tomjakubowski

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linuxftw  5 hours ago

So, the basic process is 1) Borrow stops making payments. 2) Borrow goes into forbearance for 12 months just prior to foreclosure start. 3) Forbearance ends, borrower cannot make current. 4) FHA steps in to do loan modification. Essentially, they roll the forebeared balance into the loan, payoff the existing mortgage, and issue a new FHA-backed loan, without any income or payment ability qualifications. 5) Repeat the process again.

So, the government is making everyone whole.

quietsegfault  6 hours ago

Mortgage foreclosure is a legal process that takes a very long time and is very expensive.

  • mbrameld  5 hours ago

    It doesn't take years, and it's less expensive than writing off the mortgage.

    • quietsegfault  1 hour ago

      In judicial foreclosure states, the process can take 12 to 24 months, and longer if contested or if other periods apply. In nonjudicial states, timelines are shorter but still typically 4 to 9 months from default to sale.

      Lenders incur legal fees, court costs, property taxes, insurance, maintenance, HOA dues, servicing advances, and loss of interest during the process. Industry estimates often put foreclosure costs in the tens of thousands of dollars per loan, excluding the loss from selling the property below the outstanding balance.

      “Writing off the mortgage” is not the realistic alternative. Lenders generally compare foreclosure against loan modification, repayment plans, short sales, or deeds-in-lieu, because charge-offs are accounting outcomes after losses are realized, not an operational substitute for foreclosure.

  • groby_b  5 hours ago

    Banks are perfectly well equipped to foreclose on you. Ask anybody who was around in 2008.

    You don't usually skate by on years of non-payments, so I'd sticker the original claim with [citation needed]