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Report Says Banks Increasingly Allow 'Squatting' by Foreclosed Homeowners

March 4, 2010

Our San Bernardino County loan modification attorneys have known for months, if not a year, that banks are letting more time go by before re-selling foreclosed homes. But a Feb. 27 article from the Los Angeles Times says borrowers are starting to notice -- and living in the homes rent-free while the lender delays a foreclosure or a sale. Reasons the article gives for the trend include large backlogs at banks; the low prices foreclosure sales can get in the housing market; the glacial loan modification process; and banks' ability to use former homeowners as unpaid maintenance workers. In fact, at least one lender, Citibank, has formalized the arrangement, allowing foreclosed homeowners to stay rent-free for six months if they hand over the lease.

One economist estimated that as many as 100,000 families could be living rent-free in the Inland Empire alone, judging by the difference between the number of loan delinquencies and the number of foreclosures. Among them are the Harrisons of Perris, one of the most foreclosed cities in California. Eugene and Patricia Harrison stopped paying their mortgage in October of 2008 because of a job loss, and went into default after Countrywide Financial, their mortgage holder, told them they needed to be in default for a loan modification. Since then, they've received several contradictory or confusing notices from the bank, including an order to vacate that was not enforced. Sixteen months after their last mortgage payment, they are still arguing with Bank of America, which bought Countrywide, for a loan modification.

If this trend holds, it could be a gift to struggling homeowners. Most people go into default on their mortgage payments because they have financial problems. Allowing these homeowners to live rent-free for months lets them save their money, so they can find a rental home or get legal help. But as Westminster loan modification lawyers, we are disappointed that stories like the Harrisons' are still so common. Countrywide Financial was one of the leading subprime lenders, which authorities believe was why it failed, and why many former Countrywide customers are entitled through legal settlements to loan modifications. The article doesn't say whether the Harrisons would qualify, but it's clear from the article that Bank of America has not given their case enough attention to resolve it properly.

Howard Law PC represents clients who are struggling to get a loan modification that could be hugely important to their financial and personal futures. We frequently hear from clients who, like the Harrisons, have contradictory or confusing messages from their lenders. In some cases, these clients were threatened with immediate foreclosure before they came to us for help. Our Diamond Bar loan modification attorneys can help right away, by filing a lawsuit if necessary, to stop an unfair foreclosure. We also negotiate aggressively with banks to get our clients a loan modification or another solution that protects their homes and investments. Whenever possible, we want to leave our clients in a financial situation that lets them stay in their homes for the long term.

If you're getting anxious about your loan modification or mortgage situation and your lender doesn't seem to care, you should call Howard Law today. We offer free, confidential consultations, so you risk nothing by speaking to us. To set up a meeting, you can contact us through the Internet or call 1-800-872-5925.