Banks are really bad on following up on the paperwork. This often works to their benefit. If they take title to the property, they become responsible for the taxes and maintenance immediately. If they don’t take title now and decide that they want to in the future, the courts are favorable to letting them clean up the paperwork months or years down the road.
In states with court foreclosures, it can happen that the judge approves the foreclosure. Notice is given to the borrower that he must vacate the premises and a sheriff’s sale is scheduled for Monday morning at noon.
The borrower finds somewhere to stay and moves out over the weekend. Then Monday morning at 10 am the bank takes the property off the list of properties to be sold at noon. No notice is given to the owner. The sheriff’s sale on the property is never rescheduled and the title never changes hands.
Six months later the owner goes by and discovers that the property is still vacant. There’s no heat and no electricity but the bank hasn’t taken title to the property. If they move back they are in violation of the eviction order even though their name may still be on the title. Some of them have decided to camp out in their own homes knowing that any day they may come back and find the locks have been changed and the sheriff’s sale was finally held.
“Banks are really bad on following up on the paperwork. This often works to their benefit. If they take title to the property, they become responsible for the taxes and maintenance immediately. If they don’t take title now and decide that they want to in the future, the courts are favorable to letting them clean up the paperwork months or years down the road.”
Beyond just being lazy, banks are not in a hurry to complete paperwork on foreclosed properties because when they do that, they have to list the asset on their books at it’s current value which is most likely a lot less than the loan they have against it. The more they clean up, the worse their balance sheet looks.
I have a neighbor who is renting across the street from me who had to threaten the bank on his foreclosed home with moving out and leaving it to the vagaries of vandals unless they completed the foreclosure transaction. And that was two years after he made the last loan payment.