Kim, not to pick on you, but the property tax excuse is not valid. The reason is that property taxes represent maybe two months of payments. No big deal. Andy why do I say that?

Simple, the Pooling and Servicing Agreements for the Securitized loans require that the Master Servicer make “advances” to the investors of each any every payment missed by the borrower. With most PSA’s, that must occur each and every month until the loan is either brought back to performing status or the home is foreclosed on, at which time they can get back their advanced payments. So foreclosure would make the most sense, but the Master Servicer is not foreclosing immediately. Why not?

Because the TARP money goes to the Master Servicer, so that the Master Servicer is reimbursed the advances, so that they do not go out of business due the the advances destroying liquidity.

This means that the Master Serrvicer can foreclosure at their leisure, keeping REO’s “low”, also trying to do workouts, and su much more.

Follow the money……

As to those who complain about Mark not posting more often, he has a real jjob, that requires real work. He just can’t stop and write articles to please people. He must make money also.

I would be interested in your thoughts on these quotes:

“In better times, lenders tended to begin the foreclosure process after three months, said Guy Cecala, publisher of Inside Mortgage Finance. Now it is not unusual for it to take nine months for the process to begin, he said.

‘No one is in a rush, lender-wise, to deal with the property,’ he said. ‘If you have to sell at a loss, why rush?’

Lenders traditionally write down the value of the home six months after an owner stops making payments, but the total loss is not recorded until the property is sold in foreclosure, said Mark Zandi, chief economist of Moody’s Economy.com.”

“It used to be that they wanted to foreclose as quickly as possible. . . . [Now] it’s like this hot potato that nobody wants.”

More than ever, foreclosure has become an unattractive outcome for lenders.

“What we’re seeing more and more right now are cases of a lender threatening foreclosure and the foreclosure sale is canceled at the last minute,” said Jeanne Hovenden, a Richmond bankruptcy attorney, . . . . “It’s more like the lenders don’t want to own any more real estate and are using foreclosures as a pressure tactic.”

quotes from:

http://www.washingtonpost.com/wp-dyn/content/article/2009/06/23/AR2009062303500_pf.html

What percentage do lenders now write down values after six months?

Has this percentage changed since the FASB changed its mark to market rules?

In other words, are the banks writing off very little until they actually foreclose?

Are the banks delaying foreclosures to avoid taking write downs and having to meet increased capital requirements (knowing that they have upcoming problems with commercial real estate and credit card defaults)?

I would really like to hear your thoughts.

Thanks.