Is a self-imposed eviction moratorium underway?

Rather than sell low, are banks just holding onto increasing numbers of foreclosed homes and letting the former owners live in them?

Steve Dexter, a foreclosure expert and author of "Beat the Banks," has been hearing anecdotally that a growing number of Southern California banks are foreclosing but not evicting.

Seems the lenders don't want more houses sitting empty and are telling some ex-owners to stay in their homes rather than turning around and reselling the properties right away. Rather than a foreclosure moratorium, this sounds like an eviction moratorium.

He operates out of Orange County, so I said I'd check with our readers. L.A. Land?

--Lauren Beale

Thoughts? Comments? 

Photo: A Temecula neighborhood. Credit:  Robert Gauthier / Los Angeles Times

Comments

[TrojanDLA]

That's news to me. I oppose about 5 foreclosure evictions per month and represent about 20 homeowners facing foreclosure, and have never seen a bank pause longer than 14 days before posting the dreaded 3/60 day notice to quit after the trustee sale is complete.

Which bank is this?

[syscom3]

Sounds like a great idea for many. Better to work with the "ex" owners than to throw them on the street to no ones benefit.

[Cal]

I dont think this is common place at all, I would think I would have heard a smattering or two on it. Once the bank forecloses it does them no good to have anyone in the property. I see them delay foreclosures.. But not evictions.

[farinhite_451]

Syscom,

as a renter priced out of the market for the past four years, I can see plenty of benefits.

[Valley Renter]

Well... a friend of mine just mentioned that his neighbor had his house foreclosed after missing payments for 15 months. Instead of evicting the neighbor, the bank then came back and offered to rent that house to the neighbor at a below market rent!

My friend, who has a loan with the same bank is well upside down on his mortgage and is now considering following the same path, encourgaed by the neighbor's experience. He plans to stop making payments next month.

[Owl Creek]

I wouldn't be surprised if this began happening on a wide-scale basis.

And before anyone mentions it, I'm fully aware that this isn't "fair" to responsible homeowners. However, I'd like to mention again that the banks don't care about what's "fair." They care about what's best for them as businesses, and letting these homes sit empty for months or even years on end--ripe for the picking by vandals and other miscreants--is not in the banks' best interest.

One can also argue that this actually benefits responsible homeowners in that, at least, they don't have to live in neighborhoods full of empty houses and the blight that undoubtedly ensues. (But again, the banks aren't even thinking about this--they don't care about the neighbors, only themselves.)

[Steve Dexter]

Steve Dester here. Valley renter is seeing a coming trend. I talk to investors all day. I see bank tapes, hear pleas from desperate people watch investors move in with all cash and talk to over-burdened asset managers-all of it- and I am seeing more and more owners and renters etaying put.

Banks have a growing asset overhang problem. i never thought we would see properties this cheap and we aint done

[Michelle McKay]

Until the banks get these REO properties on the market and get them sold, this market will not have a chance to recover. There are many buyers out there ready, willing and able to buy these homes. We have a false bottom right now because the moratorium has tightened up the inventory forcing buyers to fight over properties. Eventually the banks will have to sell properties and until they do, we will be stuck in this cycle.