Waiting For Foreclosure : Planet Money Increasing numbers of foreclosures have created a backlog for lenders who are struggling to keep up. That backlog means many homeowners are still living in houses they haven't made payments on in months.
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Waiting For Foreclosure

We'll be talking to a lawyer on today's podcast about what it's like giving advice to people who are considering "strategic defaults." While thousands of Americans are sitting in their homes fearfully awaiting that final foreclosure notice, many of her clients are frustrated by the bank's slow process. They want the bank to foreclose immediately so they can get out of the financial trappings --taxes, neighborhood association fees, etc -- of their current homes and move into newly purchased properties.

Planet Money friend Mike Konczal recently wrote about the tremendous backlog in foreclosures on his blog Rortybomb, where he shared this from the Analysis of Mortgage Servicing Performance:

While the number of loans in the process of foreclosure has increased, the number of foreclosures completed has fallen 31% in the past year. We believe this phenomenon is due to a combination of backlogs in the foreclosure process itself, a desire by servicers and investors to avoid accumulating even more REO property, and temporary stays of foreclosure sales due to related loss mitigation activity.

Konczal is fascinated by the so-called shadow foreclosure inventory, and it's got him wondering what life is like for homeowners who haven't made payments but haven't been foreclosed on:

The bank in this case is exercising an option to defer foreclosure -- an option I never thought would be used on such a wide-scale. How does that option work? And what kind of 'ownership' do people in these situation experience? Is it a kind of mini-vacation, where you get to live in a nicer house than you could ever afford? Is it a perpetual sense of anxiety, where someone could come to remove you within a week? Is it just a sense of resignation at being a widget that the largest banks are using to pretend second-liens assets are worth something other than a penny on the dollar -- their home as juking some financial statistics?

We know Clarence's story. Does anyone have one they'd care to share?