Why would a lender not foreclose after 3 1/2 years of non-payment?

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Why would a lender not foreclose after 3 1/2 years of non-payment?

I haven’t made a payment on my house or lived in it for 3 1/2 years. mortgage
company has not foreclosed. no notices filed. debt has been charged off and moved
to a couple different collections departments. now they want me to resume making
payments. i am not even sure if I did resume payments that the property is still
connected to the debt.

Asked on January 27, 2017 under Real Estate Law, Oregon

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

Was the house underwater on value? If significantly so, they may thought that it was not worth the effort (foreclosure can take a lot of staff and lawyer time) to do so. Similarly, if there was a glut of foreclosed homes in your area, or real estate in your area was not moving or selling well, they could have thought that foreclosure would just lead to them taking over financial responsibility (e.g. taxes, insurance, maintenance) for a home they'd be unable to sell.
You don't have a right to deed the home back--they can refuse to accept if they feel that it's not in their interest. They can insist you pay and, if you don't, instead of foreclosing, they could sue you for the money  due under the mortgage. (Foreclosure is *an* option; it is not mandatory; simply suing for the money is always another options.) As to what you should do--what worries you more: making the payments (or possibly making negotiated smaller payments) or potentially being sued? Do what is better for you financially and for your piece of mind. Do not be afraid to negotiate hard: if they thought the property was valuable and they had a good bargaining chip, they would have foreclosed.


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