Why would a bank go to the trouble of a foreclosure if there is already a tenant in the house paying them?

That's an interesting question. I think that the reason this happens is because the banks are not in the real estate business. They don't want to deal with collecting rents, handling evictions, and all the other work associated with rental properties. 

They just don't have the infrastructure in place to deal with that. I think the other reason is because there are federal banking laws that prohibit banks from owning investment property. If the banks were allowed to own rental property, then they would be more inclined to foreclose on homes. Because of this, the banks don't want to own a home with a tenant. They want to foreclose on the house, sell it, get their money back, and lend that money to someone else. That is why the foreclose on tenant occupied homes.

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