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I have posted numerous times about the impacts of the defacto-squatter economic “policy.” I say policy because I truly feel this is a deliberate and flawed attempt to socialize more losses, leaving the burden for taxpayers, Treasury creditors and future generations, in much the same way that losses to banksters were socialized. I use the word “squatter” loosely to include those who have no intention of fulfilling their contracts and are mostly just exploiting the lax approach taken to remove them.
The latest data released last week by the Mortgage Bankers Association shows that as of July 31, roughly 4.5 million borrowers were 90 days or more delinquent on their mortgages. By contrast, foreclosures were initiated on just 612,000 homes. Of the 2.3 million homes that received foreclosure notices last year, only a third were actually repossessed by year end, according to RealtyTrac. As of 2Q (see chart), only 440,000 were in REO status.
Allowing squatters to persist not only postpones the day of reckoning but is costly in terms of bank cure (loan recovery) rates.
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