Homeowners who are behind on their mortgage payments often make a mistake that, if not made, would allow them many more months to recover financially before losing their home. This mistake is when borrowers move out of their home before they are legally required to do so. And now, with the sharp rise in the foreclosure rate in recent years, there are even more reasons to stick around as long as possible.

Of course, a small number of homeowners realize the financial advantages of delaying the final move to a new apartment or rental house as long as possible. Every month without paying the mortgage or rent is extra money that can be used to pay other bills, keep up with car payments, or simply save for a security deposit or emergency fund. And as long as they still have legal rights to stay, there’s no reason to move just yet.

Some homeowners even go to great lengths to get even more time from the bank to stay in their home. They go to great lengths to seek solutions to foreclosure, request postponements of a sheriff’s sale, and defend the lawsuit in court for months. Finally, they declare bankruptcy to prolong the process even more. In many cases, this can result in months or years of living rent and mortgage free.

However, a much larger number of homeowners fall behind on their monthly bills, hear the lender’s threats of foreclosure, and simply move out of their home. The property sits abandoned while the banks take it through the legal process of foreclosure, and then sits abandoned while the bank hires a local real estate agent to sell the house. In the meantime, if it falls into disrepair and becomes a victim of squatters or people who strip the property of anything of value.

However, now that banks have so many foreclosures on their books, many foreclosure auctions are simply postponed for no apparent reason. While more homeowners than ever are applying for assistance, sheriff’s sales are being further delayed. Additionally, lenders are often incompetent enough to proceed with a public auction of a home, even if borrowers are negotiating a loan modification or other plan.

This indicates that banks are voluntarily postponing some sheriff’s auctions to avoid having to write off loans as losses and then write off properties as assets at their true market values. Banks have gotten away with overstating home values ​​for years to inflate home loan values ​​and the values ​​that make up these mortgage debts.

However, a sheriff’s sale has the result of nullifying all of these fraudulent financial calculations. The property is auctioned for a very small amount and the rest of the loan is written off as a loss. The bank must then take possession of the house if there are no third-party buyers and report the fair value of the house on its balance sheet. This may be slightly less than what the appraisal indicated at the time the loan was originated.

Thus, banks are avoiding this problem of living in reality by calmly postponing sales dates. Even if no one lives in the property, there may be a delay in the sale; all the bank has to do is contact their local attorneys, who contact the court and sheriff’s department to cancel the sale and reschedule it for next month. .

This is a new development in the foreclosure crisis that more homeowners should take advantage of. The banks don’t want to own these properties, and they sure don’t want to declare them at their true market values. With a little effort, borrowers can delay the sale for a quarter of a year or more, simply because there is a large backlog of properties in some stage of foreclosure.