As a Sacramento Bankruptcy Attorney I often take interest in matters that affect my clients in the Sacramento metropolitan area. According to an article published today in the New York Times, homeowners across the nation are beginning to take advantage of the increasing delay between eviction and the implementation of the foreclosure process by a mortgagor. In the article “Owners Stop Paying Mortgages, and Stop Fretting” by David Streitfeld, the New York Times notes that financial institutions have begun the foreclosure process against 1.7 million households across the country. Even though this number sounds staggering, many homeowners have stayed in their homes far beyond the time typically allotted to the foreclosure process.
The average eviction time has increased from 251 to 438 days from the borrower’s original delinquency on the mortgage payments since 2008. While the foreclosure process has always remained a slow one, and in California takes approximately 3 months, the lag between a bank starting the entire process and the ultimate eviction of the homeowner has become an even longer. This increased time between foreclosure and eviction can be attributed to several barriers facing financial institutions in this current economic environment.
First, many borrowers have instituted legal challenges against the mortgagor in an attempt to void the lien entirely or avoid personal liability on the loan for violations that the lender may have committed when providing the loan. For example, The Truth in Lending Act (TILA) requires that lenders include specific language and disclosures in the documents they provide to borrowers upon origination of a loan. If a lender fails to provide these disclosures then the borrower cannot be held personally liable for any default on the property. This means a lender cannot sue a borrower for the difference between the loan amount and the foreclosure sale price. Second, some state and local governments have imposed moratoriums on foreclosure. Third, the federal government has begun to apply pressure to mortgage companies to offer loan modifications to distressed homeowners. Lastly, many of the lenders are severely backlogged with multiple foreclosures and delinquent borrowers that they just cannot get to the process until well after they would be permitted to proceed with eviction according to law.
While one can never determine the rate at which a lender will actually begin the foreclosure process and ultimately evict the homeowner, it appears that more and more homeowners have begun to stay in their homes for longer periods of time essentially “rent-free” until they are forced to move out by the lender. Since the California foreclosure process is not overseen by our state’s court system, the increased delay between foreclosure and eviction may not be substantially affected by the aforementioned reasons. If you have been having trouble making your mortgage payments and have considered going into default on your mortgage you should seek advice from a Sacramento Bankruptcy Attorney.