American Entitlement Mentality: Why Should We Pay Our Mortgage When We Can Eat Steak Instead!!

[Obama 2012 1,714]

http://finance.yahoo.com/news/Owners-Stop-Paying-Mortgage-nytimes-4276925797.html?x=0&sec=topStories&pos=7&asset=&ccode

Owners Stop Paying Mortgage ... And Stop Fretting About It

ST. PETERSBURG, Fla. — For Alex Pemberton and Susan Reboyras, foreclosure is becoming a way of life — something they did not want but are in no hurry to get out of.

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.

“Instead of the house dragging us down, it’s become a life raft,” said Mr. Pemberton, who stopped paying the mortgage on their house here last summer. “It’s really been a blessing.”

A growing number of the people whose homes are in foreclosure are refusing to slink away in shame. They are fashioning a sort of homemade mortgage modification, one that brings their payments all the way down to zero. They use the money they save to get back on their feet or just get by.

This type of modification does not beg for a lender’s permission but is delivered as an ultimatum: Force me out if you can. Any moral qualms are overshadowed by a conviction that the banks created the crisis by snookering homeowners with loans that got them in over their heads.

“I tried to explain my situation to the lender, but they wouldn’t help,” said Mr. Pemberton’s mother, Wendy Pemberton, herself in foreclosure on a small house a few blocks away from her son’s. She stopped paying her mortgage two years ago after a bout with lung cancer. “They’re all crooks.”

Foreclosure procedures have been initiated against 1.7 million of the nation’s households. The pace of resolving these problem loans is slow and getting slower because of legal challenges, foreclosure moratoriums, government pressure to offer modifications and the inability of the lenders to cope with so many souring mortgages.

The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics.

While there are no firm figures on how many households are following the Pemberton-Reboyras path of passive resistance, real estate agents and other experts say the number of overextended borrowers taking the “free rent” approach is on the rise.

There is no question, though, that for some borrowers in default, foreclosure is only a theoretical threat for a long time.

More than 650,000 households had not paid in 18 months, LPS calculated earlier this year. With 19 percent of those homes, the lender had not even begun to take action to repossess the property — double the rate of a year earlier.

In some states, including California and Texas, lenders can pursue foreclosures outside of the courts. With the lender in control, the pace can be brisk. But in Florida, New York and 19 other states, judicial foreclosure is the rule, which slows the process substantially.

In Pinellas and Pasco counties, which include St. Petersburg and the suburbs to the north, there are 34,000 open foreclosure cases, said J. Thomas McGrady, chief judge of the Pinellas-Pasco Circuit. Ten years ago, the average was about 4,000. “The volume is killing us,” Judge McGrady said.

Mr. Pemberton and Ms. Reboyras decided to stop paying because their business, which restores attics that have been invaded by pests, was on the verge of failing. Scrambling to get by, their credit already shot, they had little to lose.

“We could pay the mortgage company way more than the house is worth and starve to death,” said Mr. Pemberton, 43. “Or we could pay ourselves so our business could sustain us and people who work for us over a long period of time. It may sound very horrible, but it comes down to a self-preservation thing.”

They used the $1,837 a month that they were not paying their lender to publicize A Plus Restorations, first with print ads, then local television. Word apparently got around, because the business is recovering.

The couple owe $280,000 on the house, where they live with Ms. Reboyras’s two daughters, their two dogs and a very round pet raccoon named Roxanne. The house is worth less than half that amount — which they say would be their starting point in future negotiations with their lender.

“If they took the house from us, that’s all they would end up getting for it anyway,” said Ms. Reboyras, 46.

One reason the house is worth so much less than the debt is because of the real estate crash. But the couple also refinanced at the height of the market, taking out cash to buy a truck they used as a contest prize for their hired animal trappers.

It was a stupid move by their lender, according to Mr. Pemberton. “They went outside their own guidelines on debt to income,” he said. “And when they did, they put themselves in jeopardy.”

His mother, Wendy Pemberton, who has been cutting hair at the same barber shop for 30 years, has been in default since spring 2008. Mrs. Pemberton, 68, refinanced several times during the boom but says she benefited only once, when she got enough money for a new roof. The other times, she said, unscrupulous salesmen promised her lower rates but simply charged her high fees.

Even without the burden of paying $938 a month for her decaying house, Mrs. Pemberton is having a tough time. Most of her customers are senior citizens who pay only $8 for a cut, and they are spacing out their visits.

“The longer I’m in foreclosure, the better,” she said.

In Florida, the average property spends 518 days in foreclosure, second only to New York’s 561 days. Defense attorneys stress they can keep this number high.

Both generations of Pembertons have hired a local lawyer, Mark P. Stopa. He sends out letters — 1,700 in a recent week — to Floridians who have had a foreclosure suit filed against them by a lender.

Even if you have “no defenses,” the form letter says, “you may be able to keep living in your home for weeks, months or even years without paying your mortgage.”

About 10 new clients a week sign up, according to Mr. Stopa, who says he now has 350 clients in foreclosure, each of whom pays $1,500 a year for a maximum of six hours of attorney time. “I just do as much as needs to be done to force the bank to prove its case,” Mr. Stopa said.

Many mortgages were sold by the original lender, a circumstance that homeowners’ lawyers try to exploit by asking them to prove they own the loan. In Mrs. Pemberton’s case, Mr. Stopa filed a motion to dismiss on March 17, 2009, and the case has not moved since then. He filed a similar motion in her son’s case last December.

From the lenders’ standpoint, people who stay in their homes without paying the mortgage or actively trying to work out some other solution, like selling it, are “milking the process,” said Kyle Lundstedt, managing director of Lender Processing Service’s analytics group. LPS provides technology, services and data to the mortgage industry.

These “free riders” are “the unintended and unfortunate consequence” of lenders struggling to work out a solution, Mr. Lundstedt said. “These people are playing a dangerous game. There are processes in many states to go after folks who have substantial assets postforeclosure.”

But for borrowers like Jim Tsiogas, the benefits of not paying now outweigh any worries about the future.

“I stopped paying in August 2008,” said Mr. Tsiogas, who is in foreclosure on his house and two rental properties. “I told the lady at the bank, ‘I can’t afford $2,500. I can only afford $1,300.’ ”

Mr. Tsiogas, who lives on the coast south of St. Petersburg, blames his lenders for being unwilling to help when the crash began and his properties needed shoring up.

Their attitude seems to have changed since he went into foreclosure. Now their letters say things like “we’re willing to work with you.” But Mr. Tsiogas feels little urge to respond.

“I need another year,” he said, “and I’m going to be pretty comfortable.”

[Gary and Alla 3,694]

when I read these things I often think "Who is surprised by this?" And also "Who am I supposed to feel sorry for?" The banks that loaned losers money without documenting income? The banks that loaned losers money with no investment of the loser's own? Like it or not, politically correct or not...some people are just freakin' losers and always will be. when you loan them money you will lose it.

The real problem is that the government allowed these morons to privatize the profit and socialize the loss. I really couldn't care less if my neighbor buys a boat instead of paying his mortgage, just don't come to me to bail out the bank that was stupid enough to give a loser a mortgage.

[IndigoSkies 168]

I make a decent income with some debt from student loan which I'm paying off dilligently. I haven't had a steak in more than 1 year now. Last month my total food budget was $157. I didn't feel like I missed out on anything. I feel contended knowing my debt is $687 lesser. It wouldn't have been this much lesser if I had eaten out more than once during May 2010. I ain't stingy but I R smart.

ROAR!!!!

[ScottThuy 140]

Welcome to the US.. accountability is gone... ethics.. disappearing fast... I went to a friends house for easter and there was a family there I had not met before... the father mentioned that they "had lost thier home to the foreclosure thing" ... my response was.. what foreclosure thing? " ...you know.. the forclosures that the banks are doing."... my response was.. they only do that when you dont pay the mortgage payment.... he had nothing further to say.... as if it was not his fault ..it was the banks fault he lost his house.... I later found out that he quit his job and gave allof his family's money to some cult, but they were homeless because of the bank...

where I live the home values are down approx 40% and most homes are empty... all due to the mentality of the borrowers and in some cases bad loans... if you cant pay it back.. dont borrow it to start with...

[Usui Takumi 1,562]

I'd say both parties deserve one another.

[IndigoSkies 168]

Most people know not to borrow more than they can pay off. But a man in suit and with a shinny card says, "Go ahead, take that loan," you get a sense of can-pay-it-back feeling. At least I have felt like that. I went to buy some new carpet for my house. I went in with everything decide. The color, trim, type, cost, everything. Once I went inside the store they tried really hard for me to buy the "latest" and "greatest" carpet. Instead of having nothing to pay off, had I taken their advice I would've been in debt of $1,700 in addition to the cash I had on my hand.

Needless to say I didn't buy the carpet and I haven't changed my carpet yet. I just washed my old carpet with professional cleaners for $75 and pocketed the rest of the cash for myself.

But now that my wife will be here (soon I hope) I'm debating if I should install new carpet before she comes or wait till she comes. It will give her and me something to work on together. But I ain't doing diddly squat until I have the cash to pay for the carpet.

[Nikita2Charles 32]

Both parties have to blame for this Disaster.

It's always easy to point fingers unless you are in the same situation, In california home prices have gone down by over 50% and in some places like San Juaquin valley, stockton, close to sacramento area.

it's as bad as 70%. Yet the bank is not willing to work something out with the homeowners.

SIMPLE EXAMPLE

A year ago I went to the bank afer my wife Got laid off, we were told to apply for a loan modification, we did and the bank rejected the mod. Went back to

the bank and spoke to One financial consultant, and One mortgage specialist that was at WAMU at the time

You wouldn't imagine the advice I got, if the bank is not willing to help you, you only have one options, STOP MAKING YOUR PAYMENTS.

At the moment you are using your savings to keep current on your mortgage, unless you are at least 6 months past due, your loan modification won't have much weight.

I didn't buy the house as a short term investment, or as a flipper, or roll like most folks was doing, I bought something that was on the higher end of my

budget but i could afford it.

Now that investement has gone sour

$25Billion of our Tax $$ has gone to DeutchBank and among others as part of the bail out package, all of those folks and banks who made those bad loans

and bad decisions took their money and run, and now somebody would want me to feel any emphathy for someone whose financial situation has gone sour.

When your house has gone down by 55%, for every $ you pay on your mortgage it only represents 45Cents and that 45cents you can't tap it in case you have an

emergency,

When would the housing market go back up, or just to the point where it breaks even so you can recover your downpayment money, and all the money you have been paying over the past years

The banks are making a financial decision so should the homeowners to make a financial decision that's in their best interest.

Leave out folks who took equity out of their home for whatever investment they do, but folks who have been paying and saw their equity, they downpayment,

their saving going down the drain in the house, ask yourself this question, being in this situation at what point would you pull the plug?

Edited June 1, 2010 by Nikita2Charles

[Tahoma 2,292]

Move along people. There's nothing to see here. Just another corporate apologist trying to divert your attention from the real problem.

[Mr. Big Dog 10,747]

Move along people. There's nothing to see here. Just another corporate apologist trying to divert your attention from the real problem.

Not really. These free riders kind of piss me off. They don't really want to talk about the equity they pulled out of the home just to buy stuff they couldn't afford. Now they want to complain abut owing more than what the home is worth. But that's due to their own decisions. But sure, just blame the bad bankers for their own irresponsible mismanagement of their finances. Fcuking leeches.

[alienlovechild 75]

These free riders kind of piss me off. They don't really want to talk about the equity they pulled out of the home just to buy stuff they couldn't afford. Now they want to complain abut owing more than what the home is worth. But that's due to their own decisions. But sure, just blame the bad bankers for their own irresponsible mismanagement of their finances. Fcuking leeches.

You got it. Your house is only worth what people are willing to pay and there were too many greedy people who blew their money thinking there would always be a bigger fool willing to spend his money on your overvalued home.

The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics.

Think about it. Free rent for over a year. Hallelujah, I'm a bum.

Edited June 2, 2010 by alienlovechild

[Dan J 277]

So are consumers not allowed to consider their house as a financial asset that the rest of economy does?

Companies walk away from mortgaged real estate if it no longer makes financial sense to keep paying for it, why shouldn't consumers be allowed to make the same decision?

[Tahoma 2,292]

Move along people. There's nothing to see here. Just another corporate apologist trying to divert your attention from the real problem.

Not really. These free riders kind of piss me off. They don't really want to talk about the equity they pulled out of the home just to buy stuff they couldn't afford. Now they want to complain abut owing more than what the home is worth. But that's due to their own decisions. But sure, just blame the bad bankers for their own irresponsible mismanagement of their finances. Fcuking leeches.

If these guys piss you off, then the corporate looters must really piss you off.

[Rebecca Jo 1,962]

Sounds like a smart business decision to me.

Personally though I wouldn't be flaunting myself about in the airboat.

And I would have eaten the raccoon.

[SuperDuper! 230]

Walk away from your mortgage? Be prepared to have ruined credit for the next 7-10 years. I don't see a good deal in that!

There is NO free lunch, people.

[ScottThuy 140]

Where I live, so many have walked away that they have driven the home prices on the couthouse steps to 25% or less of what the house sold for a couple of years ago... these people are in amortgage paying acouple thousand each month... or supposed to be... they instead stop paying the 2k/mo and bank it (hide it) ... a year or more later, they finally get the boot from the house or they can get a check from the govt/lender to walk out of the house if it goes into a short sale... so they can have possibly 25k or more saved up in the meantime... they then rent the same size house for 800 to 1k/mo.... they have enough money saved to buy a new car or pay the rent for a couple of years...

its short term thinking... why worry about our credit when we can have so much $ in our pockets..

I have a problem with this in so many ways..primarily the fact that they entered into a contract to repay the $... so repay it... we have rules to live by as a society.. there should be accountability...

For the investor,,, that same house that they walked away from can be paid off in less than 7 years when someone buys it and rents it out... this is causing the cost of living to drop in one way.. a good thing of sorts...hopefully people will start making better financial decisions as a result and save money.... I know its not likely... IMO they will take that extra $ and go on vacations or buy new tires and rimz....... or head out on that new airboat...