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More Homeowners Taking Advantage of Long Delay Between Foreclosure and Eviction

June 3, 2010

The New York Times published a story recently that caught the attention of our Rancho Cucamonga loan modification lawyers. According to the May 31 article, the delay between a legal foreclosure and an eviction is longer and longer these days -- and some borrowers are taking advantage of it. The article casts this as a "loan modification" that brings the loan payment down to $0, allowing borrowers to continue making ends meet or save money for a new home. These borrowers don't necessarily feel ashamed, the article said, because some believe the lenders are dishonest, unwilling to help and may even be responsible for the mortgage crisis because they made bad loans.

The article quotes LPS Analytics, which says the average time between delinquency and eviction is 438 days, more than 14 months. In January of 2008, that average was 251 days, between 8 and 9 months. More than 650,000 American households had not made a loan payment in 18 months, LPS said -- and with 19% of those, the lender had not even started repossession. The article focuses on the decision by Alex Pemberton and Susan Reboyras, a Florida couple with two daughters, to stop paying their mortgage. They say the home is worth less than half of the $280,000 they owe, and blame the lender for allowing them to take out a home equity loan outside the bank's own debt to income guidelines. Instead of paying the mortgage, Pemberton said the couple has sunk the money into their small attic-restoration business, which is recovering in a way that the Florida housing market is not.

This article has attracted a lot of attention on the New York Times website, undoubtedly in part from people who believe Pemberton and Reboyras are doing something wrong. While our Costa Mesa loan modification attorneys certainly don't recommend going into foreclosure if you can avoid it, we're not sure it's wrong to make the best financial move for your own situation. In fact, a capitalist system depends on individuals to make decisions in "rational self-interest." This is why our system usually allows large businesses to make decisions that aren't in other parties' best interests -- including the bad loan Pemberton claims his mortgage lender made. By deciding not to pay, Pemberton and Reboyras are meeting the same low standard. They are also taking advantage of lenders' own foot-dragging on evictions, which uses foreclosed homeowners are free caretakers of homes that lenders may be keeping in "shadow inventory."

Howard Law PC has handled loan modifications throughout the housing crisis. We understand what our clients are up against, because we've been on the ground with troubled borrowers since the beginning. In many cases, homeowners come to our Hermosa Beach loan modification attorneys after months of trying to get a loan workout on their own. Despite all of the hard work these clients put in, we find that we get quicker responses from the lender, which we believe is because we are attorneys. Lenders know that when a lawyer calls, a lawsuit may be coming shortly -- so they pay attention. We prefer to resolve matters outside the courtroom, but if necessary, we absolutely will file lawsuits against lenders. We can also negotiate aggressively out of court for lower interest, changes to the loan's structure and even principal reductions.

If you're sick of waiting and waiting for your lender to give you a clear, non-contradictory answer to your loan workout request, you should call Howard Law today. To tell us your story and learn more about how we can help, please send us a message online or call 1-800-872-5925 toll-free.