Enjoying the foreclosure lifestyle

As more homes fall into foreclosure, delinquent borrowers are embracing the situation.

By Kim Peterson Jun 1, 2010 2:49PM

Save on home insurance © Creatas / AGE FotostockForeclosures are clogging the system so much now that the average borrower doesn't get evicted until 438 days of delinquency.

That's up from 251 days in January 2008, The New York Times reports. About 1.7 million U.S. households are in foreclosure.


There are a few reasons for the delay. First is sheer volume -- banks just can't process all the foreclosures on time. Also, legal challenges are becoming more common. Finally, the government is pressuring lenders to provide modifications and delay foreclosures.

There's a new foreclosure mind-set, writes David Streitfeld. Instead of being ashamed or horrified, some homeowners are embracing delinquency, choosing not to pay and enjoying the extra cash in their wallets.

"A growing number of the people whose homes are in foreclosure are refusing to slink away in shame," Streitfeld writes. "They are fashioning a sort of homemade mortgage modification, one that brings their payments all the way down to zero."

 

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One Florida couple owed $280,000 on their house, even though it's worth less than half that, Streitfeld reports. They stopped paying their $1,837 monthly mortgage and put more money into their small business.

Lenders call these people free riders who are abusing the system, and say they could lose other assets when it's finally time to pay the piper.

But for some people, that's a risk they'll take. After trying, and failing, to get a mortgage modification from the bank, they're enjoying their foreclosure for as long as they can.

"Instead of the house dragging us down, it's become a life raft," one half of that Florida couple tells the Times. "It's really been a blessing."

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