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Average 17 months free housing


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2010 Oct 18, 3:57am   4,518 views  24 comments

by pkowen   ➕follow (0)   💰tip   ignore  

So I like to catch the NPR Morning Edition for a few minutes during my commute. Today, there was a report about people who are underwater and have been 'living free' by not paying their mortgages. They interviewed a lady in Maine who thought the house was 'a good investment' and then found herself unable to pay. She "did everything the bank wanted ... except pay" so I guess she felt justified in staying. The report stated the average of non-paying mortgagees is 17 months. Also stated that a foreclosure moratorium would be (even more) disastrous for for the housing market.

Thoughts?

#housing

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1   Tude   2010 Oct 18, 5:52am  

My thoughts? Pretty much this says it
http://www.oftwominds.com/blogoct10/fraud-anger10-10.html

I thought it couldn't get any worse than the behavior I saw from people riding the bubble up. I was wrong.

2   TechGromit   2010 Oct 18, 7:27am  

I firmly believe one of the Governments more recent mistakes is forgiving IRS taxes on what the banks have to write off because of an foreclosure. If more people were held accountable for these taxes, fewer would consider not paying as good financial move. While it's perfectly true that there are a lot of people out of work and can't pay there mortgages or others that willingly signed toxic mortgages (interest only, adjustable rates, teaser rates) there are just as many that can afford to pay, but because there "investment" is worth less then what they paid, don't believe that they owe the bank anything, that it's better financially for them not to pay and let the bank foreclosure. With this IRS rule change (even though it's temporary) actually is encouraging people to renege on there obligations.

3   ejh   2010 Oct 18, 7:34am  

Let me tell you about my sister. She has a great job, and can well afford to pay her mortgage, as she has done for 5 years. BUT: She is 100k underwater in her home. So, what did she do? She stopped paying the mortgage in March. It may be two years before she gets kicked out, and in the meantime she has our cousin, a lawyer, determined to "keep her in that condo living for free" for as long as possible. Why not, every news story just gives the lawyers more ammunition to stall her foreclosure, and everyone else is defaulting, why shouldn't she?

What is she doing with her strategic default windfall, you ask? She is paying off her student loans. She is having all kinds of medical procedures she could not afford before. She is getting her car serviced. She is getting botox. She is telling me things like, "Oh it's so wonderful to be able to have things again. When I had a mortgage I felt trapped, I felt suffocated. Now I am living the way I am supposed to be living. Now this is what life is supposed to be like." I believe she has a trip to Grand Cayman in the works.

Meanwhile, here I am, writing another check to the mortgage company, watching every penny, praying I don't get laid off. Does this sound fair to you? Does this sound like I should be angry at the banks? No, actually I am angry because some people are getting what amounts to WELFARE when they are not even poor. I am angry because my parents raised me to be responsible, and taught me that responsibility and honesty would be rewarded.

It was a lie.

4   TechGromit   2010 Oct 18, 9:09am  

ejh says

Let me tell you about my sister. She has a great job, and can well afford to pay her mortgage, as she has done for 5 years. BUT: She is 100k underwater in her home. So, what did she do? She stopped paying the mortgage in March. It may be two years before she gets kicked out, and in the meantime she has our cousin, a lawyer, determined to “keep her in that condo living for free” for as long as possible.

Here's a minor point she should consider, the IRS tax forgiveness expires December 31, 2011, unless they extend it. Assuming she is in her house for more than 19 months since she stopped paying, she could be looking at a 30k or 40k tax bill from the IRS curiosity of her mortgage company when they take the write off.

5   vain   2010 Oct 18, 9:49am  

ejh says

Let me tell you about my sister. She has a great job, and can well afford to pay her mortgage, as she has done for 5 years. BUT: She is 100k underwater in her home. So, what did she do? She stopped paying the mortgage in March. It may be two years before she gets kicked out, and in the meantime she has our cousin, a lawyer, determined to “keep her in that condo living for free” for as long as possible.

She is still paying the HOA I'm assuming? The bank does not want to foreclose because they do not want to pay the HOA. Keep us updated as to how long your sister can ride this wave.

6   Nobody   2010 Oct 18, 11:12am  

In a mean time, I honestly pay monthly rent for my son and myself, or we would get evicted in less than 6 months. And no lawyer or government is going to help us, because it legitimate for our landlord to kick us out. Yeah, that freaking evil landlords.

You say you are a debt slave? How about a rent slave? I have saved and saved for this housing market disaster. It only took an ordinary Joe like to me to predict the housing market crush 6 years ago. I thought I timed it well. Well, that is until stupid lawyers and government decided to rain on my parade. If you wanna moratorium. How about buyers' moratorium to hold off buying any housing until the freaking lawyers decide to stop milking the system or banks get it together.

And every freaking sad stories of home ownership gone awry that media portrays, there is always one thing in common. That home owners got crazy with home equity loan and withdrew more money than they can pay back. And they tell us these sad stories without telling us what really happened. These deadbeats can go f*(& themselves. What is wrong with living in a rental property? Oh, I forgot. You can live in your home without paying your mortgage for more than 18 months. What a deal!

7   TechGromit   2010 Oct 18, 10:38pm  

I was incorrect on the IRS rule change, it's effective until December 31, 2012. She should have plenty of time for "Free" Living.

8   TechGromit   2010 Oct 18, 10:49pm  

Nobody says

In a mean time, I honestly pay monthly rent for my son and myself, or we would get evicted in less than 6 months. And no lawyer or government is going to help us, because it legitimate for our landlord to kick us out. .... You can live in your home without paying your mortgage for more than 18 months. What a deal!

Actually it's even worse than that. Try to get a new place after getting evicted from an apartment, you'll find it very difficult to find a landlord willing to rent to you. Chances are you'll have to settle for a less desirable neighborhood. home "owners" do not suffer the same kind of problems, get foreclosed and evicted from your house and most landlords wouldn't think twice about renting to you.

9   romeotybalt   2010 Oct 19, 1:43am  

After discovering appraisal fraud, and finding myself over 50% underwater in my home, I applied for a loan mod. I stopped paying my mortgage a year ago after the person at the bank told me to miss 3 payments to qualify for the modification. After missing 3 payments, I called back for the mod, and was told to pay up or get out. Yeah right.

I have been saving over 5k monthly. I even managed to gain access to a REO for 60k that originally sold for nearly 500k. Ironically it was from the bank that foreclosed on my original home. I have been fixing up the new home while living in the old.

Do I feel guilty? Absolutely. It could be argued that I am a thief, scumbag, and a bad person. Yet, in this economic uncertainty, the appeal of living mortgage free is just too great. I can now afford college for my kids and retirement. I accept full responsibility for my actions, but I would change nothing. It is senseless to pay money to an underperforming asset!

10   Patrick   2010 Oct 19, 2:13am  

romeotybalt says

I have been saving over 5k monthly.

Holy cow. That even beats renting!

I don't blame you, I blame the bank for not actually kicking you out and letting someone else buy your house for half off.

I don't want to be paying your mortgage for you via bank bailouts or Federal Reserve printing, either.

Our system is corrupt. The idea of "supporting house prices" is just pure evil intended to trap everyone in as much mortgage debt as possible. You escaped that debt trap directly, so good for you. But the system is still firmly in place, and fighting tooth and nail to keep other debt-slaves wiping the asses of their creditors forever. The weapons they use against us all to increase debt and ruin lives: Fannie, Freddie, FHA, and the mortgage interest deduction.

Prices need to fall much more to get back into line with salaries and rents.

11   klarek   2010 Oct 19, 2:33am  

romeotybalt says

It could be argued that I am a thief, scumbag, and a bad person.

You are. But that's who wins these days. The responsible and those with integrity get fucked. Congratulations.

12   romeotybalt   2010 Oct 19, 2:39am  

Patrick, you know better than anyone that the bank would rather not foreclose as to not realize the losses. How many foreclosed homes have made it to the market?

The savings amount is incidental. However, the bank tried to kick me out. However, during the foreclosure process, the attorneys handling the case lied and stated on record that I was notified via personal service. Why should I let them off the hook? Why are they above the process of law?

I filed a motion to quash the defective service, and we have been litigating ever since. To make it worse, I discovered last week that another bank is now claiming ownership of my loan. One is sending me "new" loan modification documents, and the other is foreclosing on the home. I sent document requests to both of them to account for all mortgage activity.

The banks can't have it both ways. They get to avoid the proper recording of documents, while we must be saddled with the human costs? Yet when we advocate in court for our due process we are seen a parasites. Yeah, right. I am exercising my right as a citizen to advocate for my due process. Our forefathers founded this country on that idea.

I understand that you don't want to pay my mortgage, but we have already paid through TARP 1 and QE 1 & QE 2. And as a taxpayer who has been working since the age of 16, I have paid too. And my kids will pay in the future. But that is aside the point.

Make no mistake, I WILL litigate this case. If the attorneys for the banks underestimated my resolve, well that is thier problem. That goes to show us that only 20% of foreclosures are contested.

In my case, discovery portion of the case regarding the appraisal fraud and the question of ownership is guaranteed to take several years. The system is corrupt by design. Not only our socialist mortgage system designed to make debt-slaves out of us all, but our money system in general, which creates debt-money from thin air. That is a story that you know.

13   seaside   2010 Oct 19, 2:44am  

romeotybalt.

I don't blame you, though I think what you did is not the best.

Maybe there ain't no free lunch, but it looks like there're plenty of free living in these days. We used to consider breaking oath/contract/promise as inhonorable shame. But do we think the same way now? Bankruptcy, devorce, foreclosure, etc was a shame but not any more in current society. Everyone is taking advantage of everyone else, and it's not purnishable as long as the law doesn't forbid it. You still are law abiding citizen. So what's wrong with that? Why free living is a problem as long as the system let us? It is not we wanted or something, but the system lets us, right? We do that because we can legally do that, aren't we?

The problem is the system that rewards deadbeat, and that's the freakin shame that made people shameless. This whole thing should be illegal and purnishable by the law. Oh, well, that is not gonna happen any time soon. Will those missed mortgage be subject to confistication later? I can hardly think so. Gotta love America, so forgiving and so generous.

14   Patrick   2010 Oct 19, 3:12am  

romeotybalt says

Patrick, you know better than anyone that the bank would rather not foreclose as to not realize the losses. How many foreclosed homes have made it to the market?

Yes, that's a kind of corruption too. The bank has a real loss, but refuses to acknowledge it. That would simply be a business decision by them except for my tax dollars guaranteeing their solvency via FDIC and everything else. I don't want to pay for their deception.

romeotybalt says

However, the bank tried to kick me out. However, during the foreclosure process, the attorneys handling the case lied and stated on record that I was notified via personal service. Why should I let them off the hook? Why are they above the process of law?

Sure, I agree you should fight the bank to make them follow the law exactly.

I guess the big question is how to politically change all this. What would it take to get the president and congress to publicly state that enslaving citizens via mortgage debt is bad for buyers, and bad for the country?

On the one side, all buyers would benefit from lower prices. Even people that currently own would benefit from lower prices if they want to move up (bigger gain on next place than loss on current place). People could pay off a house much more quickly and retire earlier.

On the other side, people who are downsizing would lose equity from reduced mortgage debt (and the subsequent lower prices). And banks would lose. And Fannie and Freddie debt would go down in value. And employers would probably not be too happy to realize that their employees don't need a job quite as much.

Clearly, the pro-debt side is still much more powerful than the anti-debt side.

15   GaryA   2010 Oct 19, 5:47am  

Tude says

My thoughts? Pretty much this says it

http://www.oftwominds.com/blogoct10/fraud-anger10-10.html
I thought it couldn’t get any worse than the behavior I saw from people riding the bubble up. I was wrong.

The bubble was started by the banksters. We can see that as one co-conspirator, the NY Fed is suing another co-conspirator, BAC, as the Fed finds themselves stuck with the crap that they allowed. How funny.

16   Tude   2010 Oct 19, 6:49am  

GaryA says

Tude says

My thoughts? Pretty much this says it
http://www.oftwominds.com/blogoct10/fraud-anger10-10.html

I thought it couldn’t get any worse than the behavior I saw from people riding the bubble up. I was wrong.

The bubble was started by the banksters. We can see that as one co-conspirator, the NY Fed is suing another co-conspirator, BAC, as the Fed finds themselves stuck with the crap that they allowed. How funny.

Yes, but none of this could have happened without millions of greedy, self serving, unthinking idiots. And you think those same individuals aren't also trying to screw whoever they can to get something for nothing? Think again.

Seriously, the behavior of everyone involved has made me ill for the past decade.

17   romeotybalt   2010 Oct 19, 7:11am  

klarek says

romeotybalt says


It could be argued that I am a thief, scumbag, and a bad person.

You are. But that’s who wins these days. The responsible and those with integrity get fucked. Congratulations.

Thank You. Those who do not exercise their rights will lose them!

18   kronicade   2010 Oct 20, 7:51am  

Interesting read, I think this is more than just skipping your mortgage and banks trying to ignore losses.

This is about the sense of entitlement most Americans have.

19   bubblesitter   2010 Oct 20, 8:41am  

romeotybalt says

Patrick, you know better than anyone that the bank would rather not foreclose as to not realize the losses. How many foreclosed homes have made it to the market?
The savings amount is incidental. However, the bank tried to kick me out. However, during the foreclosure process, the attorneys handling the case lied and stated on record that I was notified via personal service. Why should I let them off the hook? Why are they above the process of law?
I filed a motion to quash the defective service, and we have been litigating ever since. To make it worse, I discovered last week that another bank is now claiming ownership of my loan. One is sending me “new” loan modification documents, and the other is foreclosing on the home. I sent document requests to both of them to account for all mortgage activity.
The banks can’t have it both ways. They get to avoid the proper recording of documents, while we must be saddled with the human costs? Yet when we advocate in court for our due process we are seen a parasites. Yeah, right. I am exercising my right as a citizen to advocate for my due process. Our forefathers founded this country on that idea.
I understand that you don’t want to pay my mortgage, but we have already paid through TARP 1 and QE 1 & QE 2. And as a taxpayer who has been working since the age of 16, I have paid too. And my kids will pay in the future. But that is aside the point.
Make no mistake, I WILL litigate this case. If the attorneys for the banks underestimated my resolve, well that is thier problem. That goes to show us that only 20% of foreclosures are contested.
In my case, discovery portion of the case regarding the appraisal fraud and the question of ownership is guaranteed to take several years. The system is corrupt by design. Not only our socialist mortgage system designed to make debt-slaves out of us all, but our money system in general, which creates debt-money from thin air. That is a story that you know.

Good for you. Happy living free for a long time and your next cash purchase of a better home.

20   HousingWatcher   2010 Oct 20, 8:57am  

I am highly suspcious of romeotybalt's claim of buying a $500k house for only $60k. Where is this house? If such an amazing deal truly existed, you would have virtually no shot at buying the place, as a realtor or someone inside the bank would buy it before it hit the market.

21   HousingWatcher   2010 Oct 20, 9:02am  

I wonder what percentage of foreclosed homeowners completely destory their houses before moving out. I've seen a few of these places and they are not pretty. One realtor told me flat out that, due to the condition of the house (courtesy of the ex owner) only cash offers were being acepted (no bank would lend for such a crummy house).

22   maire   2010 Oct 20, 10:08am  

Family in my neighborhood has spent over 24 months living free and that's this time. And it's not that they didn't have another place to go to. They'd arranged for a rent-to-own with the guy doing the necessary plumbing and electrical as the down payment, this was back in 2/2009. And would you believe that those repairs have taken this long? Yep. The bank finally foreclosed on the current house last spring. The wife then calls the bank and asks for additional time. The bank lets it go another five months before serving eviction papers. The wife ITMT is bragging that as long as they don't move to the other house, they don't have to pay anything there and that they're not paying anything in the current (foreclosed) house so...what did they do? They bought a fifth car. And this is the second trip down this road, the first being in the mid-90s which was also a rent-to-own that was eventually foreclosed on. Whereupon they came to this neighborhood in a rent-to-own, never fixed the place up, now foreclosed. And now they're going to their third rent-to-own.

A friend of mine who's a collector said that her company is getting geared up to bid on the balance due on houses after short sales. I don't know any more than that. Perhaps someone else does.

23   TechGromit   2010 Oct 20, 11:15pm  

HousingWatcher says

I wonder what percentage of foreclosed homeowners completely destory their houses before moving out. I’ve seen a few of these places and they are not pretty. One realtor told me flat out that, due to the condition of the house (courtesy of the ex owner) only cash offers were being acepted (no bank would lend for such a crummy house).

There is a point where the house is more of a liability than a benefit to the property. When it's good for nothing than a tear down and using the land for something else, it cost money to demolish a building, haul away the debris and pay the landfill fees.

24   TechGromit   2010 Oct 20, 11:34pm  

seaside says

... We used to consider breaking oath/contract/promise as inhonorable shame. But do we think the same way now? Bankruptcy, devorce, foreclosure, etc was a shame but not any more in current society.

America has degraded into a what's good for me screw everyone else society. The worse thing is politicians are rewarding this type of behavior. They removed the IRS taxes on bank foreclosure write offs, all kinds of government programs to stop, prevent or slow down the foreclosure process and bailed out financial institutions that took way too much risk. Sure there are people out there that lost there jobs and can't afford to make there fixed mortgage payments, but the bulk of the foreclosures are people who took out interest only, teaser rate, adjustable, sub-prime mortgages and this isn't such a good investment after all lets just walk away types.

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