Foreclosure on one’s home used to be a financially shameful matter. Today, homeowners are riding the foreclosure of [1]financial irresponsibility wave to the bank by staying in foreclosed homes long after they’ve stopped making mortgage payments.
[2]A June 1 article by New York Times business reporter David Streitfeld covered – and applauded – the booming business of foreclosure for homeowners.
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“Foreclosure has allowed them to stabilize the family business. Go to Outback occasionally for a steak. Take their gas-guzzling airboat out for the weekend. Visit the Hard Rock Casino,” Streitfeld wrote. In so many words, Streitfeld is saying if you ditch the mortgage, knowing that eviction will take months or years, you can take the boat on a few joy rides and hit up the local casino.
“‘Instead of the house dragging us down, it’s become a life raft,’ said Mr. Pemberton, 43, who stopped paying his mortgage on their house here last summer. ‘It’s really been a blessing.’”
Pemberton’s mother is another Floridian who has defaulted payments on her home. Wendy Pemberton stopped paying her $938 mortgage in August of 2008, according to Streitfeld.
The volume of legally entangled foreclosures have courts in Florida’s Pinellas and Pasco counties so tied up, it is going to take years to get people out of their homes.
According to Streitfeld, “any moral qualms are overshadowed by a conviction that the [3]banks created the crisis by snookering homeowners with [4]loans that got them in over their heads.” So defaulting debtors are just “stickin’ it to the man,” and if there’s a downside to breaking a contract and brazenly living off someone else’s money, he didn’t mention it.
“We could pay the mortgage company way more than the house is worth and starve to death. Or we could pay ourselves so our business could sustain us and people who work for us over a long period of time,” the homeowner-turned-squatter said.
“It may sound very horrible, but it comes down to a self-preservation thing,” said Pemberton, who, when not gambling and air-boating uses the mortgage payments to advertise his attick restoration company.
Streitfeld talked to another free riding Floridian who blames his lenders for being unwilling to help when the crash began and his properties needed shoring up. “’I stopped paying in August 2008,” Tsiogas said, when he decided he couldn’t afford the payments on his house and two rental properties.
“[F]or borrowers like Jim Tsiogas,” Streitfeld said,” the benefits of not paying now outweigh any worries about the future.”
But the reality of foreclosure is severe. Individuals who foreclose on a home usually have to wait seven or eight years before they can purchase another home, and their interest rates will be significantly higher, according to a [5]CNN article.
Based on calculations by LPS Applied Analytics earlier this year, More than 650,000 households had not paid their mortgages in 18 months. “With 19 percent of those homes,” wrote Streitfeld, “the lender had not even begun to take action to repossess the property — double the rate of a year earlier.”
So mortgage free-riding is gaining in popularity. Small wonder, considering the good press it gets from the likes of Streitfeld and the New York Times.