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For Some Homeowners In Foreclosure, A Rent-Free Stay

Wendy Pemberton, a barber in Florida, with a customer, Howard Cook.  She stopped paying her mortgage two years ago. 


Owners Stop Paying Mortgages, and Stop Fretting

For Alex Pemberton and Susan Reboyras, foreclosure is becoming a way of life — something they did not want but are in no hurry to get out of.

Foreclosure has allowed them to stabilize the family business. Go to Outback occasionally for a steak. Take their gas-guzzling airboat out for the weekend. Visit the Hard Rock Casino.

“Instead of the house dragging us down, it’s become a life raft,” said Mr. Pemberton, who stopped paying the mortgage on their house here last summer. “It’s really been a blessing.”

A growing number of the people whose homes are in foreclosure are refusing to slink away in shame. They are fashioning a sort of homemade mortgage modification, one that brings their payments all the way down to zero. They use the money they save to get back on their feet or just get by.

This type of modification does not beg for a lender’s permission but is delivered as an ultimatum: Force me out if you can. Any moral qualms are overshadowed by a conviction that the banks created the crisis by snookering homeowners with loans that got them in over their heads.

“I tried to explain my situation to the lender, but they wouldn’t help,” said Mr. Pemberton’s mother, Wendy Pemberton, herself in foreclosure on a small house a few blocks away from her son’s. She stopped paying her mortgage two years ago after a bout with lung cancer. “They’re all crooks.”

Foreclosure procedures have been initiated against 1.7 million of the nation’s households. The pace of resolving these problem loans is slow and getting slower because of legal challenges, foreclosure moratoriums, government pressure to offer modifications and the inability of the lenders to cope with so many souring mortgages.

The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics.

While there are no firm figures on how many households are following the Pemberton-Reboyras path of passive resistance, real estate agents and other experts say the number of overextended borrowers taking the “free rent” approach is on the rise.

There is no question, though, that for some borrowers in default, foreclosure is only a theoretical threat for a long time.

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 — double the rate of a year earlier.

In some states, including California and Texas, lenders can pursue foreclosures outside of the courts. With the lender in control, the pace can be brisk. But in Florida, New York and 19 other states, judicial foreclosure is the rule, which slows the process substantially.


Continue reading at the NYT  >>




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Reader Comments (8)

Well you know i think it is kinda stupid to have tent cities when you have houses sitting
going to hell. And if the people who created this mess would be treated like real criminals
maybe it would change . Live by the ink pen and retire wealthy.
Jun 1, 2010 at 1:56 PM | Unregistered CommenterJTS
i'm not criticizing these folks at all...i would do the same if i had no other choice...f*ck the banks....
Jun 1, 2010 at 2:10 PM | Registered CommenterDailyBail
Don't hide RLR.
Jun 1, 2010 at 2:25 PM | Unregistered CommenterZarathustra
I didnt think you were DB
Jun 1, 2010 at 2:34 PM | Unregistered CommenterJTS
Jun 1, 2010 at 2:39 PM | Unregistered CommenterZarathustra
"Don't hide RLR."

WTF are you talking about, you inbred moron?
Jun 4, 2010 at 2:51 PM | Unregistered CommenterRecoverylessRecovery
"i'm not criticizing these folks at all...i would do the same if i had no other choice...f*ck the banks.... "

Indeed; FUCK the banks.

But FUCK these deadbeat 'homeowners' TOO. They bit-off WAY more than they could chew, yet THEY'RE somehow suddenly entitled to get away with it scot-free just because the banksters are too? What kind of fucked-up reasoning is THAT?. These asswipes should all be put out into the fucking STREETS so that RESPONSIBLE buyers can swoop in and cash out on these losers stupidity. THAT'S the way capitalism is SUPPOSED to work.

Ultimately, such scenarios prove why the USA will NEVER 'recover' from its economic collapse: the rampant fraud that permeates it is not just at the top. That's the reason why my cleaning lady drives a Navigator even tho she only makes $400 a week.
Jun 4, 2010 at 2:58 PM | Unregistered CommenterRecoverylessRecovery

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