If you’re a harried homeowner buried in debt and have no chance of covering your mortgage, one option is just to stop paying your mortgage and save up as you wait for the gears to slowly grind toward your eviction.
The Times reports:
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.
The move works for some people. My wife’s friend and her husband are monetary morons but made a move that worked out for them when they went into strategic default on their home. It took 10 months for the bank to shove them out, which allowed them to scrap together enough money to pay off much of their other debt and save up a deposit for their rental home.
Still, I can’t see myself ever making the move for fear of ruining my credit. What do you think about the worst-case scenario maneuver?
Owners Stop Paying Mortgages, and Stop Fretting [The New York Times]