Using Foreclosure to save $30,000 in cash

[am_vanquish]

Article from New York Times about homeowners who quit paying their mortgage and still live in the house for over a year before being evicted as a result of the foreclosure. It even says the featured couple has used foreclosure 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."

Owners Stop Paying Mortgage ... Living Rent-Free

Using figures from the article:
Average # of days in Florida that a mortgage can be delinquent before being evicted: 518
Average # of payments skipped: =INT(518/30) = 17
Mortgage payment of featured couple: $1,837
Total amount saved by living "rent-free": = 1837*17 = $31,229

I bet I could do some serious damage at the Hard Rock casino with $30k.

[disneysteve]

Incredible. Forget finances - a lot of people in this country have gone morally bankrupt.

[jpg7n16]

Too bad the bank can sue them for the difference...

"you know that $31k you built up? yeah... we're gonna need all of it. Here's the court order."

if there was no difference owed, then they pretty much cashed out their equity and lost their house. Coulda done a HELOC and kept the house. Oh well. Trying to rip off people is dumb.


But yeah the article says the house was worth less. So they'll get sued, lose all the cash they have, probably lose the business, and get forced to file bankruptcy. They'll prob never be able to own a home again. Or try finding a job in a tough economy with a recent bankruptcy on your file. Way to go.

If only people realized that getting a mortgage is borrowing a lot of money and investing it in a house, and it has to get repaid sometime. "Do you understand that you are getting a loan for $280,000 and using that money to invest in real estate? If the house falls in value you still us the full $280,000."

[Joan.of.the.Arch]

Sounds like the FL legislature needs to hurry and create a lot of new courts to handle their glut of foreclosures.

[Daylily]

Un-be-lieve-a-ble.

[tulog]

Sounds like the FL legislature needs to hurry and create a lot of new courts to handle their glut of foreclosures.

Or they could do like California and allow non-judicial foreclosure, which is cheaper and faster.

[LivingAlmostLarge]

Some states like CA are non-recourse so you do walk away with that $31k.

[tripods68]

Here's my take on this.

You really can't blame these homeowners who are doing this. I feel the anger in them too. You are the ONLY one that best served you and your family, not the government or the banks. After all, these financial institutions received billions of "bailout" themselves and have done nothing to service those population who are in dire financial difficulties. Maybe you a loss a job and can't afford a payment. But yet to received loan mods. Maybe you are widower who now can't afford the full monthly payment and now behind. But banks won't work with you to lower your payments. You have folks who have loss tremendous equities with INTEREST ONLY LOAN that are now paying higher payment should qualify for loan MOD. Maybe you have a 5/1 ARM who is simply looking to REFI but can't because the value of the house is not equal to what you paid for. IF you fit this bill i just described, and the banks continue to ignore you, I'd say, let them taste their own medicine. Don't pay your mortgage.

[irmanator]

tripods, the people should have read their paperwork and used common sence when buying a house. Nobody forced them to buy these houses under these terms.

[PrincessPerky]

Incredible. Forget finances - a lot of people in this country have gone morally bankrupt.

ditto

[disneysteve]

You have folks who have loss tremendous equities with INTEREST ONLY LOAN that are now paying higher payment should qualify for loan MOD. Maybe you have a 5/1 ARM who is simply looking to REFI but can't because the value of the house is not equal to what you paid for.

If you chose to take out a highly risky loan and the gamble didn't pay off, why is it now the lender's responsibility to change the terms? That would be like me going to the casino, losing a bunch of money at the craps table and expecting the casino to change the rules so I could get my money back. What happened to personal responsibility?

[jpg7n16]

IF you fit this bill i just described, and the banks continue to ignore you, I'd say, let them taste their own medicine. Don't pay your mortgage.

Yeah. Destroy your credit score. Get your house taken from you. Let that go on your record so you won't be able to buy a house again for a long time. Get taken to court over the money you owe the bank.

That'll teach those nasty banks that gave you all that money you asked for!

[tripods68]

Let's have some perspective here about who is morally bankruptt! The US Gov't spend trillions of taxpayers today and future years to be repaid by our grandchildens children....who is morally bankrupt? Hundreds of financial institutions received billions of OUR TAXPAYERS DOLLARS, but yet to service in those who actually in dire needs. Who is morally corrupt? THe US ECONOMY ALMOST collapsed and WIPED trillions of our 401K balances investment losses because BANKS LEVERAGED their entire financial statements resulted hundreds of banks failure across the country. Who is morally bankrupt? You have hundreds of companies defaulted on theirs loan they couldn't repay. Who is morally bankrupt? We could debate this all day. But you get my point.

[tripods68]

Yeah. Destroy your credit score. Get your house taken from you. Let that go on your record so you won't be able to buy a house again for a long time. Get taken to court over the money you owe the bank.

That'll teach those nasty banks that gave you all that money you asked for!

I didn't say I approved and don't know the consequences for defaulting on their loan. One way or the other they will have to deal with it sooner or later. What I'm saying is I understand why they are doing it.

[am_vanquish]

Who is morally bankrupt? We could debate this all day. But you get my point.

What makes the featured couple morally bankrupt isn't the fact that they just stopped paying ... it's why they stopped paying and what they did with the money instead. I perfectly understand a widower who is struggling to make ends meet on a fixed income when prices are rising everywhere. If she has to choose between food on the table and paying the mortgage, then don't pay the mortage. I won't consider you morally bankrupt. But don't expect to eat steak dinners at Outback. You'll have to eat frugal, cheap meals if you're choosing between food and the mortgage.

However, that scenario is a far cry from the featured couple, who are participating in luxury activities like weekend air-boating, gambling, and steak dinners. HUGE difference.