I’ve heard of and witnessed home owners, going into foreclosure, living in their homes for two to six years without paying one mortgage payment, laughing how they are living for free, and milking the system. By simply doing a search on the Internet for specific tactics of prolonging the foreclosure process, testimonials will point out people gloating about how they’ve done it. People who are responsible home owners get little to no reward, such as being able to refinance even though their house is underwater, often due to their foreclosed neighbors. As it usually goes, people in foreclosure or who are delinquent on their mortgages often have programs to help them. Worst yet, a foreclosed neighbor living freely and pocketing mortgage payments rarely keep up their maintenance. This causes further depreciation of home values.
Home owners paying their monthly mortgage payment as agreed and maintaining their properties, should be rewarded. This would act as an incentive for good behavior, hopefully getting other delinquent borrowers to change their behavior.
Some people are in foreclosure due to legitimate reasons, such as death in families, medical bills or loss of jobs. They really tried making payments, but fell behind through no fault of their own. However in many other foreclosure cases I know of, there are people who are committing outright fraud by playing the system. Sometimes they receive help from friends in real estate or from attorneys.
I’ve also seen auctions postponed over and over for years because of bogus short sale offers. Sometimes the one getting foreclosed has a realtor buddy who puts in a fake offer on a short sale, just to slow the process down. Another trick involves tenants. And then there’s the lawyer tactic. Lawyers can postpone or remove the case from the books, simply by filing bankruptcy. This usually adds a year or more, before the foreclosure again gets put on the docket.
What kind of an example is this to the younger generation? Shouldn’t we be teaching them about responsibility?
It’s funny how they can’t pay their mortgage payments, but still have the large cable television packages of $100 or more, still have Internet, costly cell phones and are buying new cars. They live well, because they’re not meeting an obligation they agreed to when they signed their closing papers. We’re not talking about people with subprime loans, but those with low rate, prime mortgages with 30 year terms.
Buy and bail is one of the worst examples of greed. Home owners with good credit, paying their payments on time, but are underwater, have a new trick. They buy another house as a second home and then “bail” on the first house.
It appears the personality traits of these same people are that they can get out of anything, and still come out on top. Maybe if the penalties for losing your home in foreclosure, absent illness, job loss, etc, should be that you can’t buy another house for a minimum of ten years.
I have had readers complain about neighbors who are in foreclosure buying new Mercedes and BMW’s, but haven’t paid a dime in years on their mortgage. In September CNN wrote a story about the people playing the foreclosure system and people with disgusting honor proudly commented they were milking the system, such as the comment below.
“November will mark the 3rd anniversary since we made a mortgage payment and we are still in our house. We are living free. No mortgage, no insurance payments, no property taxes. What would have been mortgage payments is tucked away safely for OUR use in the future. The bank has done little to make us move. Every day we stay is money in our pocket. We realize the day will come when we have to move, but until then we are enjoying life.”
In another story by CNBC published in June, a lawyer gloated how he has several clients where he prolonged their foreclosure dates, stating several have lived three years without getting evicted and that client the story was based on was on their 6th year living for free in a house they defaulted on.
Whatever happened to pride and personal responsibility? When will people realize they are not entitled to everything, if they are not responsible? When will responsible people be recognized by their banks, government and legal system? When will those not paying on time get kicked out of their houses?
There must be a strong crack down on people and stop helping them. The Realtors putting in bogus offers should have their real-estate licenses revoked, fined or even have to go to jail for fraud. Lawyers using prolonging tactics for their clients that aren’t legitimate should lose their licenses as well.
People who are living in their homes without paying mortgages for four-to-six months should be kicked out after three months and/or have their assets garnished to compensate for their greed.
Some banks are finally coming around to these games and are now teaching people whom are milking the system. In some states and provinces, banks have been going after the foreclosed owner for the differences between what they owed on the home and what the home got sold for at auction or short sale. This is often a surprise to the original owner who felt they got away Scott free and end up declaring bankruptcy or are forced to pay the difference. Whether a bank goes after defunct lenders, filing decency judgments depends on many factors, including what state the borrower lives in and whether there’s a second mortgage or liens. A borrower often doesn’t realize once there is a judgment, there are no corners to hide and the banks/lenders are able get personal financial records, garnish wages and/or put people in jail.
Yes, the housing market might be hurt for a while, if drastic measures were taken such as kicking out foreclosed victims three to four months after they become delinquents, but in the end it would make people think twice before intentionally not paying their paymentst, which would put an end to the current practice.