This is rampant...it's happening all over the country. The cat is out of the bag...even people with good credit that can actually pay the mortgage are choosing to default because it's easier to repair your credit than wait 10 years for the property to appreciate to the rediculous levels of 2005. This is probably the biggest stimulus occuring right now because people are banking the unpaid mortgage payments. I'm sure this will continue for some time because the banks simply cannot take these losses as fast as they are occuring. It's amazing how the system is rewarding bad behavior not only with individuals but corporations as well. I'm sure there will be many many law suits when this repricing is done. The banks will be coming after all of the losses especially for second mortgages and any investment type properties. What a complete f_cking mess!!!
I know someone whom I believe hasn't made payments on 5 properties since August of 2007. No mortgage payments, no insurance payments, & no condo fee payments. However, they made sure to pay their annual property taxes. I been told if you do not pay property taxes for over 1 year the state could proceed to force a liquidation sale. But the insolvent banks do not want to show the losses on the books so not forcing the foreclosures so quick. Especially, IMHO, the insolvent banks which many of these loans, based on initial fraud by the buyer, were based upon. However, when such a bank closes and a stronger bank takes them over, then it might be a matter of 3-6 months before the foreclosure is finally taken. Unconfirmed, but I also been told there are additional stalling tactics on the foreclosures like constant switching of the title between different trust names & the actual owner. Why would this matter? Don't know but perhaps so many pending foreclosures are in the kink this just stalls it a tad.. then another transfer a tad and so on. Some of these deadbeats with 3, 4, 5, or more pending foreclosures got the best advisers and are playing this system to the hilt.
By the way, this particular individual - the banks finally forced one property to go up for a short sale but at a price like $400,000+ less than the equity - bank will take a big hit!
Thanks for the explanation. I understand this may be the case, but then the bank is taking no action on the property and in the end will have to cover it...or perhaps that is where the bank closing eventually happens and then what? Do these people continue living in these houses for free or does the gov't take em over?