CNNMoney: Knock Before Entering a Foreclosed Home

Friday, 25 Oct 2013 08:19 AM

By John Morgan

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Nearly half of the foreclosed homes in the United States are still occupied by former owners or renters, and they are staying there for free, according to RealtyTrac.

Specifically, 47 percent of foreclosed homes are currently occupied, and the number exceeds 60 percent in active markets such as Miami and Los Angeles.

RealtyTrac compiled the data by comparing its national database of foreclosed homes against postal records that showed whether mail was still being delivered or address change forms had been filed at the affected homes, CNNMoney reported.

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Pauliana Lara of the Consumer Action Law Group, which tries to help homeowners avoid foreclosure, said the continued occupancy practice is a logical one.

"Although one thinks lenders take losses by not moving evictions forward, they're still faring better by keeping the properties occupied," she explained. "Many foreclosed homes get vandalized or squatters move in."

Previous owners usually take about two months to leave a foreclosed home, but renters can take a year or more, CNNMoney noted.

Wells Fargo spokesman Tom Goyda said evictions can take months to take effect because of local laws and court backlogs.

He stated that Wells Fargo tries to expedite the process by even paying cash to persuade occupants to leave more quickly.

However, banks sometimes are in no rush to evict in markets where there are a lot of homes for sale and depressed prices. In those markets, adding more inventory may not be helpful in restoring prices.

A recent regulatory change lets some borrowers become eligible for mortgages backed by the Federal Housing Administration in as little as one year after their foreclosure, MarketWatch reported. The previous waiting period was a minimum of three years.

"This may be an influence on the private lenders to loosen a little bit on their waiting period," said Daren Blomquist, vice president of RealtyTrac.

The number of U.S. homes entering the foreclosure process fell to a seven-year low in the third quarter, according to The Associated Press, reflecting a slowly recovering housing market and fewer late mortgage payments.

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Related Stories:

America Is Seen Besieged By Vampire Foreclosures and Zombie Foreclosures

Fewer US Homes Entered Foreclosure Track in 3rd Quarter

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