Recent studies indicate that while more homes are going into default, Lenders are slowing down on actually foreclosing on the homes.

There are a number of reasons for this:

• Lenders have realized that foreclosing on a home is expensive, typically costing them around $50,000.

• Lenders have realized that they aren’t very good at foreclosing on homes and selling them. Some studies have indicated that foreclosed homes sell for as much as 20% below market.

• Many lenders have realized that they receive better value through short sales, and are pushing homeowners in that direction. Others are more aggressively pursuing loan modifications during the default period.

• Lenders understand that by flooding the market with foreclosed homes they are driving down prices, thus lowering the value of the homes in their substantial inventories.

What This Means For You

If you have received a notice of default, which is usually the first step in the foreclosure process, or even a notice of sale, do not assume that your lender wants to foreclose on your home. You still may be able to work out a loan modification, forbearance agreement or pursue a short sale. So, don’t give up before the fight is over.