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Mortgage Lenders Start to Foreclose but Stop to Leave Owners On The Hook

I just finished reading a really great article titled “Lenders Abandoning Foreclosed Properties” that was eye opening.

Apparently lenders are beginning the foreclosure process, the home owner moves out, but before the foreclosure sale is finalized, the lenders are halting them. This seems to leave the home vacant and still the financial responsibility of the owner that thinks they lost their house.

Instead, these owners are still on the hook for taxes and such for a home they believed to no longer be theirs. I guess the lesson to be learned here is to not move out of a foreclosed property until you get a notice of eviction.

“We do the cost-benefit analysis (for) the investor,” said Jeannine Bruin, GMAC’s executive director of mortgage communication. “Is he going to recoup any money for us to go through the whole process of foreclosing, fixing the property up, marketing it, selling it? Is anything coming back to that investor? If not, it’s best to just let the borrower keep ownership of the home.”

Unless the mortgage debt is discharged in court, the debtor may still be on the hook for the loan even though the property is vacant.

“We have a responsibility to make every effort to hold these borrowers responsible for any payments they agree to make,” said Joyce Biearman, communications manager at Home Loan Services Inc., a Bank of America subsidiary.

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Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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