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Delinquent homeowners find sneaky ways to fight foreclosure

Amid the turmoil in the housing market, some delinquent borrowers facing foreclosure are finding ways to use the system to stay in their homes. The average time to process a foreclosure is 674 days, compared to the 253-day average of four years ago. In Washington, D.C., the foreclosure process takes an average of 1,053 days, which is almost three years.

The tactics that homeowners are using include asking for documentation from the lender, filing for bankruptcy protection, challenging the foreclosure and procrastinating on paperwork until the deadline.

While there are many homeowners trying to make payments, many have not made payments in a significant amount of time. According to LPS Applied Analytics, nearly 40 percent of homeowners in default have not made payments in at least two years. But many people, whether because of a job loss or medical emergency, are not able -- instead of unwilling -- to make their payments on time.

Some of the tactics go back to mistakes on the end of the lenders. In 2010, the "robo-signing" scandal brought light to the fact that bank employees were blindly signing documents. That has left a window open for borrowers to challenge bank paperwork.

One man who owed $300,000 on his mortgage used that scandal to fight his foreclosure. He hadn't made a payment in two years. When documents were examined, the bank employee's signature did not match on all of the many documents. The case was dismissed by a judge, but can be re-filed. The homeowner is still in his home and not making payments.

Another man's attorney asked the bank to produce the original paperwork that entitled them to foreclose on his home. When they could not find the paper, the case was dismissed without prejudice. If the lender finds the paperwork, they can try again.

Source: CNN Money, "Foreclosure free ride: 3 years, no payments," Les Christie, Dec. 28, 2011

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