From the Wall Street Journal: Foreclosure Squeeze Crimps Las Vegas Real-Estate Market
It’s especially fabulous when you don’t have to pay your mortgage
First, the Foreclosure-Industrial Complex was overloaded, took scandalous shortcuts and was too aggressive. Now, the pendulum has swung the other way and with populist restrictions on the process, it’s arguably far too toothless:
The foreclosure delays have helped distressed homeowners like Scott Chatley, who went 54 months without making a mortgage payment. That gave him enough time to pay off debts, repair his credit, and begin saving for a down payment on his next home. Mr. Chatley, who bought a home here in 2005 for $495,000 with no money down, stopped making his $4,000 monthly mortgage payments in mid-2008 when he lost his job as a software engineer.
Mr. Chatley says he delayed foreclosure first by seeking loan modifications and then by filing for bankruptcy. His mortgage company, Bank of America Corp., last fall approved a short sale of his home for $169,000 to an investor. Though he moved out in September, Mr. Chatley says he probably could have stayed longer because the bank hadn’t been actively moving along the foreclosure.
As destructive as a foreclosure is for an individual, it’s still necessary. Otherwise, how do you get people out of houses they clearly can’t afford and get those properties back on the market for someone else who can? Wow, 54 months without making a mortgage payment? That’s why this market won’t clear.