"Delay and pray” is what a lender might do with a “toxic” asset, such as a mortgage. A bank doesn’t want to foreclose and take possession of the property, so it often applies a “delay and pray” strategy with the homeowner, praying that smaller or late payments are better than none. “Delay and pray” has been used in the financial community since at least August 2009.

A similar term (also from mid-2009) is “extend and pretend.”


Marketplace from American Public Media
Wednesday, August 26, 2009
How long can banks ‘delay and pray’?
Kai Ryssdal talks to Marketplace’s Senior Business Correspondent Bob Moon about a risky strategy by banks to put off dealing with the toxic assets that mucked up the economy and are still on their balance sheets.

Forbes.com
Real Estate Advisor
Real Estate Stock Talk: Will Hobbled Landlords Become REITs?
Stephane Fitch, 09.23.09, 12:25 PM EDT
(...)
Peter Slatin, Real Capital Analytics: That would be nice. But with just-changed and relaxed rules governing securitized loans (which include commercial mortgage-backed securities), there is additional incentive to hold on to assets rather than sell. Call it “extend and pretend” or “delay and pray,” but it will continue.

Readers’ Comments - NYTimes,com
Matt
Queens, NY
January 2nd, 20103:51 pm
(...)
The Treasury Dept’s program is another variation of “extend and pretend” and “delay and pray.” Banks simply want to get as much fee income from homeowners as possible before the inevitable foreclosure sale, since they know they’ll have to recognize a large loss at that point, and they won’t realistically be able to go after the homeowner for the balance (since the homeowner doesn’t have the money to pay it, and likely never will).

Money Magnet
March 12, 2010
“Delay and Pray” is new mantra of PE firms
Rather than addressing the underlying problem of too much debt, private equity firms’ refinancing of debt at their portfolio companies is simply extending the problems out to some point further in the future, say distressed investors.