Saturday, February 27, 2010

Living Rent Free: Homeowners become Squatters

by Bill McBride on 2/27/2010 02:48:00 PM

From Alana Semuels at the LA Times : Many borrowers in default stay put as lenders delay evictions

Throughout the country, people continue to default on their home loans -- but lenders have backed off on forced evictions, allowing many to remain in their homes, essentially rent-free.

Several factors are driving the trend, industry experts say, including government pressure on banks to modify loans and keep people in their homes.

And with a glut of inventory in places like Southern California's Inland Empire, Nevada and Arizona, lenders are loath to depress housing prices further by dumping more properties into a weak market.

Finally, allowing borrowers to stay in their homes helps protect the bank's investment as it negotiates with the homeowners, said Gary Kirshner, a spokesman for Chase bank, a major lender.

"If the person's in the property, there's less chance for vandalism, and they're probably maintaining the house," he said.
Alana Semuels at the LA Times discusses her article today:

And from Jim the Realtor, here is what happens sometimes when the occupant moves out: