Millions of failed flippers put zero down, took out a low-payment loan, and got to live in a home way above their means these past few years.
Now the homes have crashed in value, the loans have reset, and the f*cked borrowers simply stopped making payments.
Meanwhile, they continue to live rent-free in their McMansions, and are extending their stays with calls to their lenders and the government, who of course want them to stay in their homes and bail them out.
Pardon me - I just threw up.
OK, so there's no doubt this is happening all across America today. This is what you get when you ask people to put no skin in the game, and lend them stupid amounts of money with no reprecussions if they don't pay it back.
But in the end, can you blame the homedebtor? They bought a lottery ticket, it didn't pay off, and now they get to walk away (after living rent free of course). Nice game while it lasted.
Mortgage lenders see more borrowers give up
On the front lines in the mortgage foreclosure crisis, lender and loan servicer Dennis Lauria says his deepest losses are from borrowers who owe more than their homes are worth and simply mail in the keys, rather than try to work out a new payment plan.
"I can't get you to pay if you've got no skin in the game," says Lauria, senior vice president of Popular Mortgage Servicing in Cherry Hill, N.J., who says 14% of his customers with subprime loans — high-interest loans given to people with poor credit ratings — are in default.
The numbers help explain why it's so difficult to reverse the trends of rising foreclosures and falling property values. Even some homeowners who can afford to pay their mortgages are defaulting, Lauria says, because their house might have lost 30% of its value, and they figure it will be a long time before it's worth what they paid for it.
"They say, 'If I play my cards right, I can live here free for 12 months, maybe longer' " before the lender can foreclose, Lauria says. "Our challenge isn't contacting the borrower. I can talk to them, but they stick their tongue out at me."
March 11, 2008
Failed housing gamblers now living rent free in America: "They say, 'If I play my cards right, I can live here free for 12 months, maybe longer'"
Posted by blogger at 3/11/2008