When they couldn’t make their monthly payments due to job loss or the realization that their loans were greater than the value of their houses, they stopped making mortgage payments and went into foreclosure.
The foreclosure process starts with a notice giving the borrower 90 days to bring their payments current. Once that 90-day period expires, the lender can cause a trustee’s sale after a 30-day period wherein the borrower has to pay off the loan in full or the home is sold to the highest bidder at auction.
Problem is, the lenders were waiting way beyond 90 days to start the process (in New York, the average foreclosure process was taking more than 19 months prior to the procedure starting). Then, even after the 90-day period expired, the lenders were lax in actually going to auction promptly.
So what this tells me is that if someone bought a house with no money down (or even money back), they could live there for up to two years – or longer – without making a single payment or out-of-pocket expense. For this group, more help is on the way in the form of financial assistance from the government.
And who will pay for it? My son and all the other homeowners who are honoring their obligation to the lenders, as well as the portion of excessively high interests rates that can’t be refinanced. And, of course, our tax dollars are supporting this as well.
Something’s rotten here, don’t you think?
Stephen Shapiro is chairman of the Westside Estate Agency, a residential real estate brokerage with offices in Beverly Hills and Malibu.