NYT: Foreclosure Victims Stop Making Payments, Wait to Be Forced Out

by Joe Marhamati


A recent New York Times article reported that many foreclosure victims that have had no luck negotiating with the bank or taking advantage of Obama’s foreclosure assistance program have halted their monthly payments altogether.

Their strategy is simple: stop paying the mortgage and enjoy the free rent until the often protracted judicial process sees its way through, and they are physically forced to leave. The article reports that there are 1.7 million ongoing foreclosure proceedings in the U.S. and the sheer volume of legal challenges has created a bottleneck, which has led to a 75 percent increase in the average number of days that a borrower in foreclosure has waited before being evicted. In January 2008 it was 251 days; that number has now risen to 438.

The article notes that a homeowner’s “moral qualms” are easily allayed because of the role the banks had in bringing the financial system to its knees and the need to put food on the table.

From the NY Times:

“We could pay the mortgage company way more than the house is worth and starve to death,” said [Alex] 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.”

While this may seem like an easy option with few consequences, the lending industry and its partners warn that borrowers are placing themselves in a precarious spot by taking this stance, particularly with many states having laws that allow lenders to go after people’s assets after the foreclosure process is complete.

See other articles related to: foreclosure

This article originally published at https://dc.urbanturf.com/articles/blog/nyt_foreclosure_victims_stop_making_payments_wait_to_be_forced_out/2143


  1. Janson said at 6:09 pm on Monday June 7, 2010:

    I am not sure that these elective mortgage payment withholders are “physically forced to leave,” they get plenty of notice of the day of foreclosure once repossession enters the final stage - in many cases the bank will even pay a key fee to the non-mortgage payer if they leave the place in good condition. While there are clearly major negative consequences for society when people walk away and so this is not meant as promoting it the fact is still that there are exceptionally few substantiated examples of banks pursuing borrowers who walk away even in recourse states. I challenge anyone to come up with an example of a bank pursuing anyone, anywhere in the US when title was returned in an orderly fashion (not a trash out). I could find only a single somewhat extreme example in LexisNexis. I suspect it’s just too expensive for banks to pursue in the courts. Incidentally, most states have a relatively short statute of limitations on recourse, like the five years in Florida.

  1. JT said at 12:29 pm on Tuesday June 8, 2010:


    Five years is short?  In states where the banks have recourse they can/are/will sell the debt to another debt collector for some amount today.  Then, once the foreclosed borrower is back on their feet financially the debt collector will come knocking.  There’s problem not much of this happening now, but give it a few years.  Once the market and economy are on better footing and we’ll probably start hearing about the collection agencies that are going after people for the remaining debt they owe from a foreclosure years earlier.

  1. Mr. Galt said at 12:42 pm on Tuesday June 8, 2010:

    I’d hardly label these folks victims.  People don’t go into foreclosure because there house is under water, they go into foreclosure because they don’t follow through on there contractual obligation to pay for the loan they applied for when buying the home.  And just a reminder that once they have decided to stop all payments and squat in the property, it’s actually the rest of us who pay the price eventually because the money that the banks will loose will have to be recouped in some sort of way.

Comments are closed.

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