As Foreclosure Activity Drops To 40 Month Low, Delinquent New Yorkers Have Lived Mortgage-Free For Nearly 3 Years

Tyler Durden's picture

Today's foreclosure update from RealtyTrac is chock full of interesting data, although none of it is surprising. Those who have been following the complete debacle that is the fraudclosure crisis know that over the past 6 months the foreclosure activity has plunged. Indeed in April, total foreclosures, split between default notices, foreclosure auctions, and bank repossessions affected 219,258 properties: a 9% decline from April, a 34% plunge from a year earlier, and the lowest in 40 months! And while REO events (or disposals once a bank has the keys to the property in its possession) took an average of 400 days, up from 340 days a year earlier, and compared to 169 in Q1 2007, it is the length of the foreclosure process that explains not only the persistent surge in retail stocks, but why US GDP is artificially inflated by at least 0.5-1.0% (and likely has a major impact on inflation): from the release: "The average timeframe from initial default notice to REO in New Jersey and New York was more than 900 days in the first quarter of 2011, more than three times the average timeline in the first quarter of 2007 for both states." In other words, once a deadbeat stops paying their mortgage in NY or NJ, it takes nearly 3 years to get them to vacate. It also means that those who stopped paying their mortgages around time Lehman filed are still living mortgage free in the Empire and Garden States!  And there are those who wonder why the "squatters rent" amounts to at least $50 billion...

Full monthly breakdown of foreclosure activity:

And from the release:

“Foreclosure activity decreased on an annual basis for the seventh straight month in April, bringing foreclosure activity to a 40-month low,” said James J. Saccacio, chief executive officer of RealtyTrac. “This slowdown continues to be largely the result of massive delays in processing foreclosures rather than the result of a housing recovery that is lifting people out of foreclosure.

“The first delay occurs between delinquency and foreclosure, when lenders and services are no longer automatically pushing loans that are more than 90 days delinquent into foreclosure but are waiting longer to allow for loan modifications, short sales and possibly other disposition alternatives,” Saccacio continued. “Data from the Mortgage Bankers Association shows that about 3.7 million properties are in this seriously delinquent stage. The second delay occurs after foreclosure has started, when lenders are taking much longer than they were just a few years ago to complete the foreclosure process.”

On why banks no longer care to evict anyone, no matter how long they are living rent free:

Foreclosure timelines lengthening

Nationwide, foreclosures completed (REOs) in the first quarter of 2011 took an average of 400 days from the initial default notice to the REO, up from 340 days in the first quarter of 2010 and more than double the average 151 days it took to foreclose in the first quarter of 2007.

The foreclosure process took much longer in some states. The average timeframe from initial default notice to REO in New Jersey and New York was more than 900 days in the first quarter of 2011, more than three times the average timeline in the first quarter of 2007 for both states.

The average foreclosure process in Florida took 619 days for foreclosures completed in the first quarter, up from 470 days in the first quarter of 2010 and nearly four times the average of 169 days it took in the first quarter of 2007.

The average foreclosure process in California took 330 days for foreclosures completed in the first quarter, up from 262 days in the first quarter of 2010 and more than double the average of 134 days in took in the first quarter of 2007.

And why evicit: after all, all that does is to accelerate a mark to market event on a bank's books. And with banks making money (inversely) fair and square by merely gaming POMO and other monetization events, and trading with 100% perfection each quarter, who cares that there is no incoming cash flow from trillions of loans.

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FOC 1183's picture

And we wonder what replaced MEW as a source of consumption

Manthong's picture

How does 3 years and no house payments work?

Likely no response to mailings about the house from freeloaders as well.

Doesn't the tax man sell the property off for taxes owed before that?

MachoMan's picture

No.  It typically takes many years for a county to certify a property to the state and for the state to auction it or make it available for negotiated sale.  For example, right now, there is an auction in another month in my state for 2006 vintage tax delinquent properties... 

In other words, the typhoon from tax delinquencies hasn't hit yet...  and, frankly, there is dick the federal government can do about it.  The only way they can weasel out of anything is if they proclaim TBTF, et al, are federal institutions precluded from state taxation...  but, that won't change the fact that you've got a watershed event for accounting purposes and, further, won't change the fact taxes are delinquent for the next year...

glenlloyd's picture

Yes, it can take a very long time for tax sales to get to auction although there have been some changes here on the part of the counties to bring those more quickly. The big issue though is the rate charged on delinquent taxes, in Iowa it's 24%, and that's why buying tax certs in the past has been lucrative, the return was very good as long as they were eventually redeemed.

blunderdog's picture

If you don't pay your mortgage, it's much easier to make the tax payments, anyway.

zerozulu's picture

My bank Wellsfargo/chase is paying my taxes and I am getting receipt in the mail. I am late 33 months so far. ( LI, NY )

MachoMan's picture

my guess is this will become more widespread practice as the banks get bitten by tax sales of their secured properties...  sounds like wells has already been bitten ;)

FunkyMonkeyBoy's picture

Land of the live free, home of the bravely not paying.


downwiththebanks's picture

Land of the fraudulent banker-gangsters getting off scott free for their crimes.

doomandbloom's picture

OT but....Five tons of confiscated gold and silver jewelry go on auction next week in Texas.


what is this all about?

Hephasteus's picture

Allow drug dealers to be tax collectors. When they have plenty of taxes collected. Seize it. Keep it in vaults and when state gets into money trouble auction it off.

km4's picture

And why evicit....Sickening but true !


downwiththebanks's picture

You can't evict, banker-gangster, because you don't own the house.

LawsofPhysics's picture

How are those securities/mortgages valued on the books of those banks?  he he

MrPike's picture

And how are they valued on the books at the Fed?

fajensen's picture

Up 110% since the recovery - Risk ON baby!

Dick Darlington's picture

This is one of those "only in America" moments.

Village Smithy's picture

I think $50 billion is just the beginning. Add in no property tax because the bank owns the house now, no building insurance because the bank owns the house now, no maintenance costs cause the bank owns the house now, etc. It adds up to a lot of free cash flow for the weekend trip to the outlet mall. Go ANF!

Clowns on Acid's picture

'Tis funny...just when the SEC and Treasury are screaming about price discovery and transparency in the equity markets, they are ensuring that the price discovery mechanisms in the RE market stays opaque.

All the RE brokers are now trying to convince potential buyers to "get pre-approval" for a X value mortgage, from bank mortgage lenders before coming to brokers. Y'know..."give me a firm bid, and I will go get you an offer". And of course RE brokers tell buyers that this helps them in negociation. 

Now watch ili Timmy and his band of soft, faux intellectuals bang the ES close.


johngaltfla's picture

Of course since RMBS doesn't have to be accurately priced and the U.S. has deviated from honest accounting to C.R.A.A.P. accounting the banksters can declare these foreclosures on the books at 2006 price levels if they please. It's a joke and it's about cash flow.

Eventually the music stops and when the A.G.'s do not settle with the banksters they will take those states down hard and ram hundreds of thousands of foreclosures through the system in a very, very short time period. The banksters are already making those preps now and testing the "new new systems and procedures" in various jurisdictions. When they are ready they will punish those politicians and states who did not play ball.

I figure that will push Florida to up over 700,000 in the judicial backlog when they file them some time in 2012; just in time for election season.

buzzsaw99's picture

yeah but they still have to live there. lulz

aaronb17's picture

My house is in foreclosure right now.  We stopped paying in March, 2010. We will live in it until we're ordered to leave.  Right now I'm actively defending the foreclosure to make sure it doesn't happen quickly.  

It's our way of recouping some of the losses we've suffered from buying at the tip-top of the market (June, 2006 was when I bought, with encouragement from everyone -- realtors, bankers, the government, they all were cheering me on). 

One thing I've discovered: It's a lot easier to get by in life once you stop playing the debt game.  I used to spend a third of my net income on interest payments (car, house, credit card, student loan).  When we stepped off that merry-go-round, we were amazed to see that the world didn't end, and life was a lot less stressful. 

We haven't even filed for bankruptcy.  Ultimately I expect to settle our debt for about 50 cents on the dollar (principal only of course -- no more interest).  The only negative consequence is (horrors) we can't get loans anymore.  Oh noooooo!   And we get to live a couple years rent-free. 

d00daa's picture

How many iPads have you purchased?

buzzsaw99's picture

thank you for sharing but a note of caution for others, you may wish to consult legal counsel before adopting any plan of action along these lines.

MachoMan's picture

Accounting help too on the tax from gains on debt settlement :)

FreeNewEnergy's picture

Ah, macho, you're such a card. Gains? Taxes? Get real.

The apparatus of the federal government is so irretrievably broken that they're lucky anybody pays any taxes at all. The boyz down in the bowls of the IRS high-five each other over the fact that payroll tax deductions still happen weekly, bi-weekly or monthly.

The poop has already hit the fan and it's blowing back feces in the faces of politicians and bankers across the country. This is still nothing, what we're seeing now. Prepare for complete systemic breakdown in every aspect of civilized existence.

Those who have any faith that the ponzi can continue on without interruption are simply clueless. One gets ahead of the game by whatever means available, be it not paying a mortgage, defaulting on credit cards, hijacking a tractor-trailer full of Panpers ( an associate once did this after he found out he knocked up a girl and she was having twins - saved him a pantload - to borrow an e-trade line).

There's no fucking rule of law, so why should anyone bother treating banks or government with any respect whatsoever? Tax laws? What? Will they round up everyone and imprison them?

Don't answer that.

Almost Solvent's picture

Imprison? No, but the lender will issue the dreaded 1099-C "Cancellation of Debt" which the IRS of course tracks.


Once the system implodes, then jubilee. Until then, debt settlement has tax repercussions in the form of involuntary 1099-C for debt cancellation of more than $600.


The IRS (and state departments of taxation & finance) consider that "income" you are "required" to report. 


Unless, you file the magical IRS FORM 982 to exclude the 1099-C as "income"

MachoMan's picture

Apparently someone hasn't been prodded by the long dick of the law yet...  and it has an itchy trigger finger until jubilee... 

JoeSexPack's picture

Challenge the lender's documented links to your house.

The loan & deed to your house two different things, check that link.

Many loans were made & transferred without new lenders registering these mortgages at local courthouses, which is needed to collateralize the notes.

Meaning they might have your name & credit rating, but no house as collateral.

Play this game, & pay taxes for 7 years, & it's yours. After a credit rating hit.

State laws will vary.

MachoMan's picture

It's a very difficult standard for permissive use of a property to rise into adverse possession...  I would suggest reading up a lot on the subject, tailoring an approach to your jurisdiction, and making for sure to let there be no doubt, objectively, as to your desire to hold against the interest of all others...

But the charade won't last 7 years...  the state will boot you out before then, unless you pay property taxes...

FreeNewEnergy's picture

You got that right. Here in NY it's ten years and the operative term is adverse possession. My day of enlightenment was, sadly, the day my father died and left me and my two siblings the house and a mountain of debt in July 2009.

The CC debt is history. The house has been occupied by me since August, 2009. Lots of discrepancies in the original loan docs, BAC filed foreclosure over a year ago, and "crickets" since.

I maintain, pay taxes, etc., etc. Other sibs have no interest, though eventually they are each entitled to a third. Were it my own house, that I had bought with my own DP, the situation might be different, but the original CW loan is a sham and the banks knows it, also filed a bogus robo-signed assignment.

Being as the criminal elite (and I am taking credit for coining that term) has screwed everybody and his/her uncle over in the past 10 years and continue the raping and pillaging of the US economy even today, I feel not one iota of shame or moral turpitude in taking the banks for as much as I can. If I could find a way to default on 100 more residential mortgages, I would do so in a heartbeat. They want to play night baseball with metal bats, let's get it on, brothers!

The days of playing nice and within the parameters of law are over. Now it's bricks and bats and balls to the wall with these fuckers. They'll get exactly what they deserve from me, in honor of my father (a good guy, WWII vet and all that) a shit sandwich with an exploding penis inside.

It's truly us vs. them. Rock on, and enlighten the sheeple around you.

MachoMan's picture

The way to fight them is to not burden yourself with their debt...  or, alternatively, to do more homework before taking on debt. 

When I see rants like this, I always wonder where the other side of the coin was...  are you suggesting that because your father was a good guy and all that he should have gotten a free house and toaster out of the deal?  If so, do you propose that I pay for it?  If so, what is your moral basis for doing so?

The fact of the matter is that you see a free lunch and know the other side is impotent to deal with it.  That's fine, the banks would definitely do the same...  but don't make it sound like you're doing god's work blankfein.

LFMayor's picture

Averaged 35 cents on the dollar, still paying the house.  Free and clear of all the cards this past month.  My 401k plan won't allow me to withdraw and take the hit, can only be for medical or foreclosure, else I'd take the hit before it gets looted.

Go for the gold man, stick it to those pricks!

smlbizman's picture should at least preface your comment and identify yourself as to fucking stupid to navigate my way thru...

 so you present yourself as stopping payment on your credit cards, your house and other items all in the name of what? i actually don't find you any different from the "bad" guys....pawning your loses off on may want to provide more detail in your post, or others may assume the same things...are their circumstances that made you adopt your current policy?....

FreeNewEnergy's picture

Read my comment above and get off the moral high ground for a moment. Come down to earth with the rest of the serfs and take a look up at Lloyd Blankfien and his buddies who would take money directly from your pocket, your clothes, your shoes, your women and kids if they could (and they might still).

I pay CC bills monthly and the morons keep increasing my credit limits. Seriously, I live like the Tyler Durden of movie fame, in a foreclosed-upon property, albeit in a much better neighborhood. I AM JACK'S UNPAID MORTGAGE DEBT.

The bankers themselves would default on these "shitty" loans, gladly, so why should you be any different? So as to not become like them? Give me a break. You can never become like them. They control billions and trillions of dollars; you are lucky to have reign over a couple hundred thousand, maybe a million. Stiffing them is the most patriotic thing you can do, because they are the cause of all of our country's pain. They are the traitors, the liars, the thieves, the tricksters, manipulators and deceivers.

Am I getting my point across?

I'll be back. Need to fix another drink. Started early today when I discovered I'm only half way through the average foreclosure time span, because I'm WAY ABOVE AVERAGE.

MachoMan's picture

What good are drug dealers without end user demand?  This nonsense about banks being the root of all evil is incredibly convenient and self serving in your case.  The fact is, people make bad decisions all the time...  banks and serfs...  and the real cause is much deeper than a superficial entity...

Bam_Man's picture

Good for you.

But don't forget that Uncle Gorilla is going to send you a 1099 for every payment you have missed. Keep some cash handy to pay that bill when it comes. The IRS can be a real bitch.

bigdawg's picture


The Mortgage Forgiveness Debt Relief Act (know as H.R. 3648) was introduced in Congress on September 25, 2007, and became law on December 20, 2007. This act offered relief to homeowners who would formerly owe taxes on forgiven mortgage debt after facing foreclosure. The act extends such relief for three years, applying to debts discharged in calendar year 2007 through 2009. (With the Emergency Economic Stabilization Act of 2008, this tax relief was extended another three years, covering debts discharged through calendar year 2012.) Normally in US law when a lender decides to forgive all or a portion of a borrower's debt and accept less, the forgiven amount is considered as income for the borrower and is liable to be taxed. However, The Mortgage Forgiveness Debt Relief Act of 2007 amends the Internal Revenue Code to exclude from gross income amounts attributable to a discharge of indebtedness incurred on a principal residence. H.R. 3648 would ensure that any amount forgiven on mortgage debt secured by a principal residence would not be taxed. This bill will apply whether it is a short sale, foreclosure, deed in lieu of foreclosure or any other similar arrangement that relieves the borrower of the obligation to pay some portion of their debt on their primary residence. The amount of forgiven mortgage debt allowed to be excluded from income tax is limited to $2 million per year.
Calculated_Risk's picture

BS. I lost my home. Didn't pay jack shit. Only concern is if it's not a primary residence, and it's over a million.

blunderdog's picture

I see this comment so many times here on seems so strange that it'd be so common here, where almost everyone is a toughguy.

For the most part, the IRS is a paper tiger.  Once you've come to terms with a life that doesn't completely depend on access to near-unlimited leverage, there's very little to worry about from the IRS.

They're not going to put you in prison unless you really work at it, and quite frankly, chances are you've never once had access to enough money for them to care much about.  You get a letter, you tell them what you can afford, they give you a schedule.  You fall off the schedule, you call 'em up and tell them you need to work out a new schedule.

Most people's fears are as rational as kids cryin' about monsters under the bed.

MachoMan's picture

This.  The IRS also hates attorneys and hates court oversight.  I recommend hiring an attorney that can pay for his own way by knocking more off the negotiated settlement than you could get on your own.

Their settlement or offer in compromise is completely based upon your net assets and present income stream...  if you have dick for net assets, then you'll likely be able to settle for pennies on the dollar...  the IRS WILL cut its losses, take the money, and run.  They can (and will) sink their teeth into any real property you might have though...  and after the lien is filed, you won't be getting rid of it until you dump the property or settle. 

Calculated_Risk's picture

Convert all assets to pm's or non-traceable paper (i.e. cash) long before you file bankruptcy.  Keep the absolute MINIMUM in you're savings account. Look at the IRS means test for your area, and try to get your "income" at or below that level. This way it will be easier to file chapter 7. If you can, go for chapter 7 bk. Wipe it all out! If your gonna go, may as well go nuclear!!!

Clowns on Acid's picture

"It's our way of recouping some of the losses we've suffered from buying at the tip-top of the market (June, 2006 was when I bought, with encouragement from everyone -- realtors, bankers, the government, they all were cheering me on)."

I bet a lot of people wish they could do that with their Lehamn and Bear Stearns stock.  

sabra1's picture

so, you're saying that if i live near the Mississippi, my home gets flooded out and ruined, i can no longer live there for free, and, and, i will have to PAY to rent to live in a sub basement apartment? that's not fair!

Fíréan's picture

The "dead bests" are in the banks and mortgage servicers.

It deminishes the blog when the writers here perpetuate the stereotyping of all persons who are in arrears, foreclosed on or below water with their mortgage as dead beats.

JLee2027's picture

Yeah, the author didn't get the real reason for the foreclosure slowdown.

Fucking fraud, people are fighting back.

JLee2027's picture

aaronb17: Same here. 

They are trying to Robo-Sign me out right now. My lender (Equifirst) was shut down in 2009, so things are pretty unclear if anyone actually holds a valid note.  

the not so mighty maximiza's picture

Typical NY with the BS double standard.   If my tenants have not paid buy the second month, my server goes out and the court date is within a few weeks, ether they pay, work out a deal or sherriff comes a knocking.   I rent myself waiting for this stupid NYC housing market to go down but they keep it up with this shoestring and dental floss crappola.  As a renter myself when i see people living free in a house it IS ill gotten gains just as bad as a Goldman girly boy with a bailout.