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August 29, 2014

Many Home Owners Stay Put After Foreclosure

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Many Home Owners Stay Put After Foreclosure

Nearly half of the nation’s foreclosed homes are still occupied, according to a new study by RealtyTrac. That percentage is even higher in some markets: 60 percent of foreclosed homes in Miami and Los Angeles are occupied. Because the owners or renters of these homes aren't being evicted until months or even years after the homes go into foreclosure, they continue to live in them without paying a mortgage or rent.

To reach its findings, RealtyTrac used its database of foreclosed homes and compared it with postal records to see which addresses were still receiving mail and which had a change-of-address filed. The study found that people who rented a home that went into foreclosure often stay for a year or more afterward.

“If someone has a bona fide rental agreement, we have to abide by that,” explains Amy Bonitatibus, a spokesperson for JPMorgan Chase. 

Banks say that evicting a person after foreclosure is often a slow legal process. Some banks try to speed up the eviction process by offering cash to get occupants to leave. However, other banks actually prefer that home owners stay in a home after foreclosure, even if they are not paying the mortgage. 

"Although one thinks lenders take losses by not moving evictions forward, they're still faring better by keeping the properties occupied," Pauliana Lara of the Consumer Action Law Group in Los Angeles told CNNMoney. "Many foreclosed homes get vandalized or squatters move in." 

Distressed homes — including foreclosures and short sales — accounted for 14 percent of existing-home sales in September, the National Association of REALTORS® reported this week. That percentage is down from 24 percent in September 2012. On average, foreclosures sold for a discount of 16 percent below market value in September. 

Source: “Half of nation's foreclosed homes still occupied,” CNNMoney (Oct. 24, 2013) and “While Existing-Home Sales Fall, Prices Rise,” REALTOR(R) Magazine Daily News (Oct. 22, 2013)

Read more:

Foreclosure Activity Drops to 6-Year Low
Foreclosures Cause Wave of Poor Health
6 Questions Foreclosure Buyers Should Ask