Do you gamble? Well if you’re any good at it you learn that “playing with the house’s money” means you essentially are playing for free. You see since you have had some winnings, the ideology is that it doesn’t cost you anything to play since it is technically money that wasn’t there to begin with.
That’s why they have programs for gamblers who buy into that false economic thought process. Too bad they don’t have the same type of program for those in foreclosure.
You see a new financial epidemic has risen in this Country. Millions of homeowners in foreclosure have stopped, or are unable to pay their mortgages, and are basically living for free. Essentially gambling that they are literally playing with the house’s money.
And they’re actually winning. You see the Courts are clogged, the banks sometimes don’t evict, and the Obama Administration is giving them billions of dollars and resources to…well, keep playing.
Some are victims of their own economic circumstances, unable to afford their mortgage and expecting to lose their homes if they can’t get a break from their bank. Others are opportunists, choosing not to spend on a house worth less than they owe. Instead, they can live rent-free until their lender makes a move.
Some call these homeowners strategic defaulters. But obviously they’re pretty slick gamblers who are as cunning at playing the mortgage game as Doyle Brunson is at Texas Hold’em.
It wouldn’t be any big deal, and most of us really wouldn’t care except the moral dillemma of millions of homeowners losing their homes flies in the face of prudent financial practicality. By not letting the market correct itself the economic volatility is self-perpetuating.
How widespread is this problem? Nationwide, “roughly 3.5 million loans are in this limbo land, and are not proceeding through very quickly. It could take years,” said Sam Khater, an economist with CoreLogic, which tracks mortgage performance. “I have a feeling it’s going to follow the path of unemployment and have a long tail.”
Critics of loan modification programs say the housing market would be better served if foreclosures moved more quickly, and that any resulting drop in home prices is necessary to reset housing values to their pre-bubble levels.
Allowing delinquent homeowners to remain in their homes for months or years means many of the owners will stop maintaining their properties, which hurts their neighborhoods, and their own delinquency may even encourage neighbors to default, prolonging the housing market’s problems.
“There’s no survey data on the demographics of nonpaying homeowners. But with unemployment and recession affecting all socioeconomic levels, the nonpaying phenomenon spans poor neighborhoods and rich ones, from tiny condos to multimillion-dollar houses”, said Jon Maddux, CEO of YouWalkAway.com. The company provides legal and financial advice to homeowners who’ve stopped paying.
Maddux said defaulting is one way owners have of “lashing back” at lenders when they’ve been frustrated by a lack of response or denial of their loan modification. He rejects the notion that borrowers have an ethical obligation to keep paying, saying mortgages are contracts that specifically include language about what happens if the borrower stops paying.
“We’ve made it so sacred to pay your mortgage, when it shouldn’t be that way. People shouldn’t make their families suffer to pay a mortgage that has an exit strategy in the contract,” he said, referring to foreclosure.
Wow…did you ever think we’d see the day when foreclosure was so common and widely accepted that borrowers would be encouraged to look at foreclosure as an exit strategy?
I guess we can do away with promissory notes in the future.
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