On average it costs the lender between $50,000 and $100,000 to foreclose on a property. In the long run, it would cost less for them to work with the home owner to find a solution to the problem than evict them from their home. Often, the home owner has to be the one to point this out to the mortgage company though. It can be a very effective negotiating tactic.
Why does it cost so much to foreclose? First there are the costs of going through the legal process of eviction. The lenders have to hire local attorneys that specialize in these types of procedures. Then there are fees associated with filing the lawsuits and eviction proceedings.
If the home owners fight back, then the lender’s legal fees begin to climb faster and faster. Once a foreclosure or eviction notice is final then the mortgage company has to pay the costs of evicting homeowners if they refuse to leave the dwelling voluntarily. A lender with any intelligence would want to work with a home owner to stop foreclosure.
After securing the property from the evicted home owner, the lender is then left to deal with the aftermath. Often, if a home owner doesn’t have the money to keep up their mortgage payments, they also did not have the money to maintain the property either. And some of them, in anger over what was going on, do damage to the property before they leave it. All of this now falls on the mortgage company to deal with.
Whether the property was damaged due to neglect or spite, the lender will usually not do anything about it. This makes the value of the property fall and the longer it is neglected the further the value falls. In the end, the lender will receive far less for the property than what they would have if they had worked with the owners to stop foreclosure before it began.
Even if the bank does not do anything to maintain the property, they still have to deal with the other costs in owning that home. Any taxes that are due on the property have to be paid by the lender. And, some level of home owner’s insurance will need to be maintained on the property to protect the lender from accidents to the property. And when they try to sell the property, the mortgage lender will need to use local real estate agents.
That means they will be paying commission fees to them when the property is ultimately sold. It just makes no sense for a mortgage lender to incur those costs when it would be more effective for them to work with the current home owners. This is just one piece of information that can help you to save your home from foreclosure.