If you read my blog regularly, you know I have commented that there haven’t been as many foreclosures in Charleston (or even homes in pre-foreclosure) in the past three-six months as there were the prior six months. I’ve speculated about the cause of it – bank backlog, overload, robo-signing problems…but I didn’t think about this reason until I caught this article today from Forbes.
You don’t have to read any further to understand that there might be a squirrely reason behind the slowdown. But here’s an excerpt.
They are allowed to accrue interest on non-performing mortgages ” until the actual foreclosure takes place, which on average takes about 16 months.
All the phantom interest that is not actually collected is booked as income until the actual act of foreclosure. As a resullt, many bank financial statements actually look much better than they actually are. At foreclosure all the phantom income comes off the books of the banks.
How do you like them apples?