April 11, 2008
Banks close an eye as home owners default on payment
NEW YORK - BANKS in the United States are so overwhelmed by the housing crisis they have started to look the other way when home owners stop paying their mortgages.
Lenders who allow owners to stay in their homes are distorting the record foreclosure rate and delaying the worst of the housing decline, said Mr Mark Zandi, the chief economist at Moody's Economy.com. These borrowers will eventually send more homes on to an already glutted market.
'We don't have a sense of the magnitude of what's really going on because the whole process is being delayed,' Mr Zandi said. 'Looking at the data, we see the problems but they are probably measurably greater than we think.'
Lenders took an average of 61 days to foreclose on a property last year, up from 37 days in the year earlier, according to RealtyTrac, a foreclosure database.
'Some people stay in their houses until someone comes to kick them out,' said Metro Lending owner Angel Gutierrez. The Dallas-based Metro Lending buys distressed mortgage debt. 'Sometimes no one comes to kick them out.'
BLOOMBERG NEWS
EastLiving.com.sg
Contact Stuart Chng: (65) 9691 9907
Email: stuart.chng@eastliving.com.sg
EastLiving - Singapore Property and Real Estate DB
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