The Truth About Staying in Your Home Mortgage Free

You say that there isn’t anything in life that is free? Well, for millions of American homeowners, living in a home may be about the closest thing to a free ride that any of us can expect to get. These aren’t people who have paid off their mortgages or won the new home sweepstakes, rather they comprise a large number of folks who simply quit making mortgage payments and are riding out a long, legal battle with the intention to get them to move out of their homes.

Delinquent Homeowners

According to CNN Money, there are 4.2 million homeowners who are “seriously delinquent” or have had their cases referred to an attorney. If you think that legal intervention is the fast track to removing a homeowner, then you aren’t familiar with state laws that protect homeowners. Indeed, in New York it takes an average of 800 days from the first missed payment to final auction. In Florida, where foreclosing seems to be a rite of passage, its 807 days. Nationally, the average is 565 days — that’s about 19 months.

As reported, there are some homeowners who have stayed put for as long as five years. Rent and mortgage payment free.

Most homeowners who are staying put aren’t deadbeats. In the case of Charles and Jill Segal of West Palm Beach, Fla., they bought their home in 2003, but faced newly adjusted payments that tripled a few years later. As the new rate kicked in, their home inspection business began to dry up, putting additional pressure on the couple.

Backlogged Cases

Why is it taking so long for the foreclosure process to get homeowners to move on with their lives? A number of factors are evident including large numbers of foreclosures clogging the courts, state laws designed to protect consumers and financial institutions overwhelmed by the sheer number of cases.

Many homeowners are fighting back, contending that their mortgages were toxic, insisting that they were designed to entrap them later on. The Segals assert that their lender committed fraud and is asking a court to rule in their favor, lowering their payments to a more manageable level. That’s something the federal government has wanted lenders to do, through the Mortgage Debt Relief Act of 2007 and subsequent programs. Comparably few homeowners have been helped with millions, like the Segals, forced to fend for themselves.

Even if homeowners successfully win their cases and are able to obtain reduced financing, they must have the resources to pay back what they owe. Indeed, more than half of the mortgage modifications made in 2008 were in redefault again six months later. [2]

References

[1] CNN Money; Squatter Nation: 5 Years With no Mortgage Payment; Les Christie; June 9, 2011

[2] The Arizona Republic; Federal Mortgage-Relief Aid Too Little, Too Late for Homeowners; J. Craig Anderson; March 8, 2009

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