Well maybe not the best thing that has ever happened to you, but a recent article in the New York Times got me to thinking: can foreclosure be a blessing in disguise? The Times article tells the story of a family in Florida who is taking full advantage of the backlog of foreclosures currently swamping Florida courthouses. In Florida, the average home spends 518 days in foreclosure and many past due homeowners are using this lengthy period to actually save money by living “rent free.” Most in this situation first attempted a mortgage modification which was denied by their lender. Left without options these homeowners are also left without mortgage payments which has freed up significant disposable income. In fact, the article brightly documents the new possibilities that have opened to the “victims” of foreclosure as they wait for the process to run its course. The featured family has been able to inject some much needed cash into the family business, eat out more and even take their boat out for a spin on the weekends. Who knew foreclosure could be so grand?
A Word Of Caution
With millions of Americans struggling to make each month’s mortgage payment and with foreclosure proceedings having been initiated against 1.7 million of the nation’s households, the “rent free” foreclosure scenario may sound appealing. It is important to keep in mind however that Florida is a judicial foreclosure state. This means that a lender must go through the court system to foreclose. The 518 day average foreclosure period in Florida is completely a function of state law. States like Florida that require court oversight of foreclosure give attorneys the opportunity to challenge the process more effectively than states like Texas which allow foreclosures to take place outside of court supervision. Consequently, while the foreclosure process in Florida can take over a year, a bank can successfully foreclose on a home in Texas (and other power of sale foreclosure states) in as little as three months start to finish. The point is this: the speed with which your lender can foreclose varies by state. If you have questions, consult an attorney.