Here’s how foreclosures used to work. It takes a year and several thousand dollars worth of legal work to actually foreclose on a home, during which time the bank or lender is also deprived of revenue from the mortgage because we aren’t making payments, remember. But as long as home values were going up AND THE BANK COULD ACTUALLY SELL FOR THAT HIGHER AMOUNT it didn’t really matter. That’s because the increase in home value during the foreclosure time frame usually more than made up for the legal costs and lost revenue, even for houses originally bought with no money down.

[http://blog.cringelysmortgage.com/2009/01/04/the-foreclosure-game/]