The article Foreclosure limbo: Staying without paying. from CNN Money says:
Some 4.2 million mortgage borrowers are either seriously delinquent or have had their cases referred to lawyers to pursue foreclosure auctions, according to LPS Applied Analytics. Of those, two-thirds have made no payments at all for at least a year, and nearly one-third have gone more than two years.
Nationwide, it takes an average of 565 days to foreclose on borrowers in default from their first missed payments to the final auction. In New York, the average is 800 days and in Florida, where the "robo-signing" issue is particularly combative, it's 807.
Thats a lot of people in foreclosure proceedings.
Over 2.5 million people have lived rent free for a year and over 1.3 M have done so for 2 years.
Average foreclosure process takes 1.5 years and over 2 years in some areas.
I wonder if all of these are primary residences or if they are also including rental properties in the totals? I'm guessing rentals may be mixed in there so the owner could even be getting paid rent while making no mortgage for 1-2 years at a stretch.
I don't see too much harm in a mortgage holder in default living rent free in the home during foreclosure. The alternative is leaving the home and letting it sit vacant. If I were the bank I'd prefer the property to be occupied rather than an invitation for vandals and crackhead squatters.