If you are in default on your mortgage do not feel like you need to leave your home immediately according to a study by LPS Applied Analytics. The average home that has missed their 3rd monthly mortgage payment takes 492 days to go from the initial foreclose filing to the bank taking possession of the home.
Now here is a big caveat. These statistics do not apply to every homeowner. If you are going into foreclosure you can not expect to live for free for the next 16 months. The results vary depending on the state you live in and the urgency of the lending institution that you are dealing with.
Banks can’t foreclose fast enough to keep up with all the people defaulting on their mortgage loans. That’s a problem, because it could make stiffing the bank even more attractive to struggling borrowers. In other words, people who default on their mortgages can reasonably expect, on average, to stay in their homes rent-free more than 16 months. In some states the number is closer to 20 months.
That’s a meaningful incentive, and it’s likely to grow unless banks manage to boost their throughput. Speeding up the process won’t be easy, as demonstrated by the banks’ continuing legal troubles related to robo-signers, bank employees who signed foreclosure affidavits without properly checking the required loan documentation.
Millions of Americans still are paying their mortgages even though they owe more than their homes are worth. The more banks’ backlog grows, the more likely they are to join it, adding to the already giant pile of foreclosures weighing on the housing market. But don’t read this and think you are safe.