Homeowners Hurt by Flood of Foreclosures May Find Relief with Chicago Bankruptcy
With the $26 billion settlement between states and the country's largest lenders approved, a wave of foreclosures is predicted to wash over the market.
Banks had been holding on to many delinquent properties since late 2010, according to CNN Money. That's when mortgage lenders began rethinking their foreclosure processes after falling under suspicion of robo-signing, a practice in which bank employees allegedly signed off on numerous foreclosure documents without proper verification.
While banks waited, some folks were able to continue living in their homes for months - or years - after they had stopped making mortgage payments.
On average, it now takes a bank 370 days to repossess a delinquent property. In some states, it takes even longer - for instance, Florida homeowners are in foreclosure limbo for an average of 861 days.
But though a stalled foreclosure may sound like a way for distressed homeowners to buy time, it's actually bad news.
Not surprisingly, many borrowers now suffer from years of damaged credit and limited savings that will translate into difficulty securing financing - or a rental property - once they're booted from their home.
Delayed foreclosures have affected all homeowners by keeping real estate prices artificially high. According to the article, new foreclosures could push already-low prices down by another 3.7 percent this year.
Optimistic market experts believe the flood will finally lead prices to bottom out and, eventually, encourage home buyers to take action.
With banks poised to pursue foreclosures more aggressively, mortgage holders need a solution they can count on. Filing for bankruptcy has the power to stop foreclosure and allow consumers to restart their lives.
More Blog Entries:
Flood of Foreclosures to Hit Housing Market, by Les Christie, CNN Money