Some homeowners stop paying mortgages - and stay in homes!

Yesterday: "You don't pay...You don't stay!

Today: "Don't pay, stay, and see what happens!"

You have a 1 in 5 chance of being kicked out of your house for non payment of your mortgage...

This NY Times article really blows the traditional lid off what you think of traditional foreclosures.

This is a quote from the article: "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..."

This may not be the most moral approach since the homebuyer agreed to pay one amount, but is now paying another amount or not at all, well...it amounts to fraud...in this case by the homeowners!

I can empathize if there is a major change in medical, employment, or income status - but even with the IRS forgiveness of the 1099 taxable income, the lender still has a note from the homeowner promising to pay.

Hence, this presents another "moral (fairness) hazard" (in addition to bailing out people who have overextended themselves to purchase a house) that once the homeowners who "are" paying their mortgages hear this, they will also say "why should I be paying my mortgage if others don't pay theirs and get to stay?".

Oh and I heard the other day that banks are now selling their deficiency judgments to debt collectors who will be hounding the homeowner for years down the road. Is this the kind of job growth that was promised over a year ago?

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