Borrowers Losing Their Homes are Staying in Them Longer for FreeSubmitted by bobbyw24 on Thu, 09/09/2010 - 14:38
When Eric Peterson buys foreclosed homes through courthouse trustee sales these days, the majority of borrowers are still living in the home rent-free, waiting to be evicted.
That is a dramatic change from last year, when most properties were vacant by the time of a foreclosure sale.
"Borrowers are savvy now and they know that once they lose the house, they can milk the system for time and cash," said Peterson, a managing director at the Sacramento private-equity firm Praxis Capital Inc., a large buyer at trustee sales in seven Northern California counties.
"A year ago, nobody knew what 'cash for keys' was," said Peterson, referring to the payments of $1,500 to $3,000 that a borrower typically receives from a servicer to move out.
"It's like all the defaulted borrowers held a secret meeting and now they all know," he said.