The foreclosure process in the US is easing out, allowing delinquent home borrowers to stay in their homes for months after they stop paying mortgage debts, according to Freddie Mac.
It said that homes are taking as long as eight months to work their way through the foreclosure process, two months longer than the typical process before the housing crisis.
The delay was the result of more borrowers staying in their homes for months after foreclosure proceedings had started, requiring Freddie Mac to force them to leave before it could put the home onto the resale market.
“People understand that it’s difficult for lenders to get them out of their homes, and so they are staying longer,” said Mark Zandi of Moody’s economy.com. “In the past, if you got an eviction notice, you were likely to leave quickly. Now people are staying until there is a sheriff at their door.”
A number of foreclosures are contributing to the slowdown, but so are mounting legal queries surrounding bank procedures to repossess homes from delinquent borrowers. According to real estate data tracker Core Logic, around 6.7 million houses are either in the stages of foreclosure or delinquency, and almost 30 percent of the total home sales involve distressed properties.
In the case of Freddie Mac and Fannie Mae, which accounted for more than 190,000 foreclosed properties, the process of getting distressed homes ready for resale costs millions of dollars. If the borrowers remain in their homes, Freddie Mac will be offering them financial assistance for relocation, a scheme that is called “cash for keys”.