You missed one of the choices of the bank in dealing with the delinquent home ‘owner’.. the forth is to take the property in foreclosure and then lease/rent it back to the previous ‘owner’ they foreclosed on. The bank then takes the lease payments and applies them to the banks cost of capital for the money the bank borrowed to finance the mortgage in the first place. This gives the banks time for/to:
1) find a better tenant.
2) sell the property when real estate prices have stabilized.
Admittedly, #2 has risks, but it may be better to the bank instead of flooding the market with foreclosed properties. All they time that the banks are waiting for the prices to stabilize/inventory to decrease, they are getting ‘rental’ payments on the property.
