Why move when you can stop making payments and continue living in your home?

[Retire Soon]

Well, just when you thought you'd heard everything in the mortgage debacle, you probably haven't. We've all heard about people who "walk away" from their mortgages. But, why move out of your home when you can stop making your house payments and continue living in it? Yes, you heard right. This is exactly what some people are doing in homes valued for as much as two million dollars and for as long as a couple of years, because the courts are either backlogged with foreclosure cases or mortgage note ownership cannot be proven.

Developments : Why Walk Away? Mortgage 'Squatters' Stay in Their Homes

 

[Art G]

I would think in California you're going to see a lot of this. Even if the banks took the homes back, they'd be buried in them and they will be sitting empty for quite some time. So, at least with someone in them, the lawn is cared for, the pool is kept clean, and the house isn't getting vandalized.
If you don't care about your credit, it seems like this may be the answer to your dreams!

 

[Notmuchlonger]

Like anything else. When enough people do it. Society deems it ok.

 

[UncleHoney]

I'll bet one of these days we see enterprising squatters driving around neighborhoods looking for empty houses. When they find the right one they just move their stuff in, have the gas, electric and water turned on for a small deposit and their all set. They might even be able to strike up a deal with the mortgage holder for an easy payment plan.

I'll almost bet money on this happening in the near future.

 

[Khan]

I'll bet one of these days we see enterprising squatters driving around neighborhoods looking for empty houses. When they find the right one they just move their stuff in, have the gas, electric and water turned on for a small deposit and their all set. They might even be able to strike up a deal with the mortgage holder for an easy payment plan.

I'll almost bet money on this happening in the near future.

It might be better for the neighborhood than sitting empty, deteriorating, being vandalized for plumbing and wiring...

 

[W2R]

It might be better for the neighborhood than sitting empty, deteriorating, being vandalized for plumbing and wiring...

...being occupied by transient druggies using it as a crackhouse/flophouse when they aren't out vandalizing the neighbors' houses (occupied or not) for copper and architectural details to sell for drugs...

 

[Walt34]

That's thinking outside the box. Wait, they're inside the box they're living in. They could save up a down payment while they're waiting for foreclosure.

Now I'm confused.

 

[tryan]

Wow, that's amazing ... imagine the forthcoming scheme of books/tapes leading people to stop making mortgage payments because the note holder can never prove he has the note. Akin to the paying taxes is unconstituional racket. WOW.

 

[redmcclain]

One of my coworkers did this - stayed in her home for a year without making payments before she was finally forced to move but even then the bank gave her $500!

 

[laurence]

Well this settles it, the "Pay off the mortgage or beat the spread in the market" debate is OVER!. Stop paying $2k a month on mortgage, put the money into your retirement accounts in lower risk mutual funds, eleven years later when they finally evict you you can FIRE!

 

[al_bundy]

Wow, that's amazing ... imagine the forthcoming scheme of books/tapes leading people to stop making mortgage payments because the note holder can never prove he has the note. Akin to the paying taxes is unconstituional racket. WOW.

actually that is the funniest part since the banks make sure to charge you a lot of money in closing costs for every fee they can think of. and to squeeze every penny of profit they decided not to do cheapo things like record changes to the owners of the notes

now it's coming back to bite them. too bad countrywide never sold my loan. NYC records are on the internet and you can easily see any changes.

 

[clifp]

what bank to screw?

Well this settles it, the "Pay off the mortgage or beat the spread in the market" debate is OVER!. Stop paying $2k a month on mortgage, put the money into your retirement accounts in lower risk mutual funds, eleven years later when they finally evict you you can FIRE!

I am with you this scheme is the ultimate answer on the pay off mortgage vs keep it when you retired. No take out a bigger mortagage and don't pay is the winning answer.


I like Pen Fed to much to screw them. BofA holds my mortgage but if the Country Wide deal goes through I'll be a shareholder so that seems dumb.

So I am looking for bank/savings loan, who will loan me another 400-500K on this house and that be really stupid about me paying them back. Any nominations?

 

[Freein05]

In California the foreclosure process takes about 90 to 120 days. It works like a fine tuned clock. What does throw a wrench in to it is not the average person with little money it is the person with money who can afford an attorney. What they will do is file for BK a day or two before the foreclosure sale which can put the sale off or file some other legal action for the lender to prove they hold the mortgage. Low income people may be able to get legal aide to help them but free legal aide of any kind is hard to find these days.

So it is the guy with money that is doing this not your average person.

 

[toofrugalformycat]

Here in Anchorage I know a couple who stopped making payments and stayed in the place for a year before they were forced to move out. This was in the mid-80's. There were so many people turning in the keys, it was probably easier for the bank to just let them stay.

 

[chinaco]

The bank will eventually evict them. But it might be better for now to let them stay. Empty houses are often broken in to and vandalized. In some cases stripped of anything of value including the doors.

 

[tryan]

Most of the bank owned property I've purchased has had people in the house. All were renters brought in after the foreclosure. Many had not paid rent in months. Realtors explained that the bank just wanted some one in the house to keep the heat on in the winter. Evicted all of them eventually .... but tell the bank they need to have the place vacant before the closing .... they'ld rather lower the price. They're simply not in the rental business.

 

[TickTock]

That suggests an interesting strategy - market yourself to the bank as a no-rent REO house-sitter. You keep up the property on your own dime.

Hmmmm.......

 

[Sandy]

This has always been the way it works. Over 20 years ago, a co-worker was getting divorced. she moved into an apt and was paying rent. Her ex stayed in the house, but neither was paying the mortgage. He was waiting on the foreclosure process and would leave when he had to. In the mean time, he had no rent/mortage payment.

 

[W2R]

That suggests an interesting strategy - market yourself to the bank as a no-rent REO house-sitter. You keep up the property on your own dime.

Hmmmm.......

Now THINK about that. What a miserable existence!!! Living in a doubtlessly trashed house, for an indeterminate length of time, with endless buyers tromping through. Yuck.

 

[Art G]

....vs. living in the street?

 

[W2R]

....vs. living in the street?

Hey, when I was 19 maybe I would have considered something like that. But now? I mean really?

 

[tryan]

Because the banks are not in the rental business, they're naive about the risks inherent to owning rental property. Was negotiating with a bank for a duplex ... they were stuck at 40k ... I wanted it for 30k (like 2 others I had purchased from the same bank). During my inspection I suspected lead paint on the doors and windows ... NOT GOOD in MA. Also noted a 2 year old in the first floor ... CLEAR VIOLATION of MA lead paint laws.

I told the realtor to tell the bank "they have a HUGE liability here. Who better for a tenant to sue than a BANK! And by the way, I'll pay 40k if they delead the units. No way I am taking ownership of this liability." Bank came back with the idea of adding the deleading costs onto the sale price. I said "no way, what else is on your REO list." Couple weeks go by, the units are deleaded for a cost of 5k (all new doors and windows primarily). My realtor calls saying they'll take 40k. Closed it with 20% down.

If the 2 year old had come down with lead poison ... he'ld be part owner of that small bank.

 

[Art G]

Hey, when I was 19 maybe I would have considered something like that. But now? I mean really?

You'd be amazed by how many people live in this manner. Buy a house, and if you can't make the payments just duck the creditors. Then you've got those who buy cars with little intention of making payments.
"Hey! If you'll approve me for the loan, I'll drive it 'til you take it away!"
I tried repo-ing cars once.....just once.

 

[W2R]

That suggests an interesting strategy - market yourself to the bank as a no-rent REO house-sitter. You keep up the property on your own dime.

Hmmmm.......

Now THINK about that. What a miserable existence!!! Living in a doubtlessly trashed house, for an indeterminate length of time, with endless buyers tromping through. Yuck.

....vs. living in the street?

Hey, when I was 19 maybe I would have considered something like that. But now? I mean really?

You'd be amazed by how many people live in this manner. Buy a house, and if you can't make the payments just duck the creditors. Then you've got those who buy cars with little intention of making payments.
"Hey! If you'll approve me for the loan, I'll drive it 'til you take it away!"
I tried repo-ing cars once.....just once.

I thought Tick Tock's comment (to which I was responding... see above) meant responding to the bank as a third party housesitter.

 

[Art G]

Oh, sorry. I know there are already people who housesit for real estate agents. They just have to be ready to move on a moments notice.
I guess too many conversations going at once.