Delinquent Homeowners

Many Americans have stopped paying their mortgages and remain in their homes

by: Carole Fleck | from: AARP Bulletin | September 1, 2011

Early in the housing crisis, foreclosures moved through the system relatively quickly, taking just months from the first default notice to eviction. Today, the process in some states can take three years or more.

In New York, where Martinez lives, it takes an average 858 days for banks to foreclose. At that pace, lenders would need 84 years to clear their inventory, according to Herb Blecher, a senior vice president at LPS Applied Analytics, which tracks real estate data. Homeowners in New Jersey can live "mortgage-free" for an average 728 days while banks complete the process; in Florida it's 853 days.

In the hard-hit Las Vegas area, where one in every 19 homes received a foreclosure notice this year, attorney Jacqueline McQuigg says lenders "start the foreclosure process but they don't want to finish it. That never would've happened years ago." But she and other lawyers say that lenders are better off having owners occupy the properties rather than risk the vandalism, mold and general neglect that can come with vacancy.

The Segals, in their 50s, have no plans to move out. They can't sell and pay off the mortgage. They owe about $519,000, but the property is worth about $270,000. Their foreclosure case is pending.

Light, 80, faces a similar quandary. The $6,000 he was paying for mortgages for both houses exhausted his savings. Yet he doesn't want to sell because he owes much more than the homes are worth. In March, he won the foreclosure case against one of his homes — the lender's paperwork was ruled deficient. The lender can seek foreclosure again, but the process would start all over.

"I retired comfortably in 2000 and felt I had plenty of assets to sustain me," Light says. "The real estate crash devastated me. I'm determined to stay in my house and maintain it rather than let it deteriorate like hundreds of others around here."

"I don't rest easy about this," he says, "but I don't have anyplace to go."

Carole Fleck is a senior editor at the AARP Bulletin.

Your Turn: Can we fix the foreclosure mess? >>

Facing Foreclosure?

If you've fallen behind on your mortgage, a counselor may be able to help. But stay clear of those who ask for fees upfront, or who guarantee they can stop a foreclosure or get your mortgage modified.

Here are some groups that can guide you.