Study: Larger Loans Spend Longer in Default
July 13, 2011
The time it takes for a home owner to be foreclosed on may be directly tied to the size of the potential loss that the bank might face.
Defaulting home owners who live in houses worth more than $417,000 were found, on average, to be able to stay in their homes mortgage-free without fear of foreclosure for more than a year. However, home owners in homes worth less than that are often evicted in 300 days or less, according to an analysis by ForeclosureRadar.
Home owners with second mortgages may be able to stay even longer. Defaulting borrowers with second mortgages stay mortgage-free, on average, 393 days compared to those with one mortgage who are evicted, on average, after 291 days.
“The truth is that the larger the loan balance you have, the more upside down you are in the home, and the bigger the loss for the lender, the better your chances are of not being foreclosed on for a very long time,” says Sean O’Toole, CEO of ForeclosureRadar, which conducted an analysis of 150,000 foreclosures over a three-year time span.
Source: “New Foreclosure Study Finds the More That’s Owed, the Longer the Defaulter Can Stay,”RISMedia (July 13, 2011)
Updated: May 27, 2022