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Foreclosure Facts in Today's market Condition

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By : Alan Barker    99 or more times read
We are all aware of the foreclosure problems US is facing and quiet serious right now. Hundreds of thousands of "home owners" are underwater, and owe far more on their homes than they could ever sell them for.

Many of these homeowners have come to the conclusion that walking away from their home is a better financial decision than making payments until real estate values recover. Numerous "strategic defaulters" now can afford to buy mortgage payments.

Just as how the foreclosure process works, it usually takes at-least 8 months of missed payments before the bank will actually finalize the foreclosure and repossess a house. The increasing number of foreclosures in the market has made banks taking years to initiate foreclosure auctions. Banks definitely don't want to add losses from these foreclosed or repossess properties.

Underwater homeowners can not only eliminate thousands in debt by being foreclosed on, but with way the system works, can also save money by not making home payments for many months.

This flaw in the foreclosure process is actually providing what is known as "stealth stimulus. ”People who are living rent free in homes undergoing foreclosure, have a lot of extra cash, and most of this is helping the overall economy by being spent.

To be specific, some owners of underwater homes listed in the Boston Massachusetts MLS are actually making money off of the foreclosure process by renting out their homes that they aren't making payments on.

Foreclosure was meant as a way to protect banks from negligent borrowers by using the real estate as collateral. With the current real estate market, and dodgy lending practices that occurred during the housing boom, foreclosures are providing the opposite effect. Going through the foreclosure process is providing financial benefits to underwater borrowers while bringing huge losses to banks.

While strategic defaulting is definitely not ethical, in some cases it provides huge financial relief to insolvent borrowers. Because of the slow foreclosure process that stimulates buyers in today's slow economy to give out extra cash to people who need money for housing repayments.

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