In a nutshell, bank forecloses on mortgage, you move out. Bank decides they can’t make any money back on the mortgage and instead writes the debt off but doesnt have to tell you.
Title holder remains accountable for accumulating taxes, mortgage payments and fees but doesnt know.
dead asset affects credit and eligibility for various insurances etc.
dudes are going to die as a result because they can’t get access to certain health cares etc.
So the bank sends people a letter that they are going to sell their house to someone else, and they walk away as if it’s already done? This is why despite my typical libertarian bends, I’m a big fan of financial regulation. It’s way too easy for “bankers” to make everything way too complicated for the average person to understand.
It shouldn’t be difficult for someone to know whether or not they still own a house.
Wait a minute…does this mean that if the bank forecloses on you, then decides they won’t make any money on it…you technically then own the property free and clear of any further costs to the bank…just liable for taxes and such?
Look at it from the banks point of view. You paid $75K on a house worth $50K (overpaid). They kick you out after you live there for 5 years paying the bank roughly $25,500 total plus maybe $5,000 down. Bank tries to sell the house for $50K but can’t and sits on it for 2-3 years. Bank builds up ~$10K in past due taxes (say $3000 in taxes + fees for 3 years). Plus the entire time the family is squatting in the house. Now rather then pay off the tax man and loose that money its a better deal if you just left it all go and walk away with 41% return rather then a 27% return.