Banks Paying Cash to Homeowners to Avoid Foreclosures

[happyslug]

7. Forecloses costs run into the THOUSANDS of Dollars

In my home county, just to list the property for sale by the Sheriff cost $1500, which is addition to any filing fees and Attorney cost incurred to get to the Execution sale. $10-20,000 in legal fees are NOT unusual and that is Pennsylvania which is a "low cost" state when it comes to attorney fees.

If the Owner has a clean title (A title search will reveal that) then a "Deed in lieu of Foreclosure" saves the bank a lot of money. In most execution sale the buyer of the property tends to be the bank, which bids the money owned on the Mortgage (if a higher bid is made, the excess over the mortgage goes to the Home Owner, so the bank has no reason to bid more then the outstanding mortgage plus costs). The bank then sells the house as any other house would be sold, and in this economy for a lot less then the outstanding mortgage.

Thus, even if the house is sold for less then it is worth, the bank makes out by NOT having to incur the cost of foreclosing on the property. This benefits the bank more then anyone else, but the home owner gets the knowledge that, in most cases, the bank has no plans to go after the homeowners for the excess of the mortgage over what the house is sold for. In many homeowners view this is enough of a plus to agree to a deed in Deed in Lieu of Foreclosure.