If the bank rules were changed so that the banks have to start writing down the asset-value of the loan if the payments are more then two months behind, then they would be faster to foreclose, and faster to sell the foreclosed house rather than keep it on the books and pretend it still had full value.
“If the bank rules were changed so that the banks have to start writing down the asset-value of the loan if the payments are more then two months behind, then they would be faster to foreclose, and faster to sell the foreclosed house rather than keep it on the books and pretend it still had full value.”
Yes, and this practice also interferes with the market prices of all homes, artificially inflating them. The banks are restricting the supply, thus driving up the price.
It’s that, and stalling helps keep some artificial valuation in the marketplace. Stalling foreclosure also keeps the borrowers on tap for taxes and HOA fees if there’s no escrow account.