Lots of good answers here. It is common for homeowners to do this and the banks love it because they would rather see a home occupied than vacant. Although the homeowner holds title until foreclosure the house is still considered a bank asset. The homeowner enjoys not making mortgage payments and the bank enjoys seeing their asset being taken care of until, or if, the property actually goes into foreclosure at some point in time. I am seeing more pre-foreclosed homes not going into foreclosure for 2-3 years at a time.
It is interesting to think that If a mortgage payment is $900 a month x 24 months = $21,600. Even more disturbing is if the bank offers to a homeowner any special short sale programs that will actually give cash back to a home owner, say $10,000 or so as incentive to "Get back on their feet," for lack of better words.
Eli Givoni, Director
Short Sale Department, LLC
Serving all 50 states
MARS Disclosure for General Commercial Communications
Short Sale Department, LLC is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit.
I have seen homes in Jersey City where the homeowner has not paid the mortgage in over a year and the bank and note even started the foreclosure process. Once they do it still takes 18 to 24 months in New Jersey for the home to finally be foreclosed on. I am not sure the reason for the banks' delay but I know it is happening. And the entire time the owner can stay in the home as long as they wish.
Simply stated, the home"s ownership remains that of the owner until the "Foreclosure" is final, regardless of pre-foreclosure or short sale conditions.
We are finding that moving out and then moving back in to a pre-foreclosure is very common, quite possibly because of people reacting to their situation prior to understanding the full extent of their situation.
He did the smart thing, you should never walk away from your home. Walking away from your home is strategic default and is very dangerous. Look here... http://bit.ly/ivIgQ2
Larry Sarlo CDPE
Certified Distressed Property Expert
Helen Cocuzza Realtor Associate
Better Homes & Gardens Real Estate Mary Holder Office