foreclosure

The housing crisis is still ongoing. While the national conversation has shifted away from foreclosures in favor of unemployment and big government bailouts, many Americans are still in trouble with their mortgages. I seem to remember there used to be a time where, if you were in trouble with a loan, you would pay any little bit you could. Maybe you paid half at the beginning of the month and half on your next paycheck. Maybe it was even less than that. What counted was that you were making the effort. You work with your lender to avoid going into foreclosure at all costs.

That was then. Now, the new hotness is just to say to hell with paying your mortgage. Homeowners are letting themselves go into foreclosure with no intention of paying their mortgages, so that they can use the extra money on truly important things… like going out to eat at Outback and taking trips to the Hard Rock Casino.

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.”

Get that? In today’s loony liberal land, it’s all the lender’s fault. It couldn’t possibly be the homeowner’s fault that they bought a house they couldn’t afford. Right?

Maybe not. The couple quoted in this story, Mr. Pemberton and Ms. Reboyras, aren’t exactly blameless in this situation. Just like most people who go into foreclosure, really.

The couple owe $280,000 on the house, where they live with Ms. Reboyras’s two daughters, their two dogs and a very round pet raccoon named Roxanne. The house is worth less than half that amount — which they say would be their starting point in future negotiations with their lender.

“If they took the house from us, that’s all they would end up getting for it anyway,” said Ms. Reboyras, 46.

One reason the house is worth so much less than the debt is because of the real estate crash. But the couple also refinanced at the height of the market, taking out cash to buy a truck they used as a contest prize for their hired animal trappers.

It was a stupid move by their lender, according to Mr. Pemberton. “They went outside their own guidelines on debt to income,” he said. “And when they did, they put themselves in jeopardy.”

So they refinanced their home to buy a new truck — not even a truck that they needed for themselves, but a truck to give away. And yet, this was a stupid move by the lender?! Right. It’s the big bad predatory lender’s fault for not telling poor Mr. Pemberton that he was a big fat idiot.

And by coincidence, I’m sure, Mr. Pemberton and Ms. Reboyras’ lawyer seeks out these kinds of cases and encourages people to not pay their mortgages. This way, you get to live in your house — for free!

Both generations of Pembertons have hired a local lawyer, Mark P. Stopa. He sends out letters — 1,700 in a recent week — to Floridians who have had a foreclosure suit filed against them by a lender.

Even if you have “no defenses,” the form letter says, “you may be able to keep living in your home for weeks, months or even years without paying your mortgage.”

About 10 new clients a week sign up, according to Mr. Stopa, who says he now has 350 clients in foreclosure, each of whom pays $1,500 a year for a maximum of six hours of attorney time. “I just do as much as needs to be done to force the bank to prove its case,” Mr. Stopa said.

It’s sickening, really. There are people out there milking the system for all its worth, taking no responsibility for their bad decisions, and then blaming the lenders when they end up in trouble. It’s usually the bad decisions of the borrowers that put them into foreclosure to begin with, and then they just want to sit back and do nothing, because somehow, everyone is apparently entitled to live in their home without paying the mortgage on it now. There are always alternatives, ways to avoid foreclosure. It isn’t like selling the home isn’t an option, but no one wants to do that. They can’t renegotiate their loan either, because the lenders are big bad predatory crooks out to get them. Apparently, the right thing to do is to squat in a house you don’t even fully own yet without paying what you legally owe.

In reality, this is theft. It’s a crime, and the bums should be thrown out on the street like they deserve. I have no sympathy for someone who pays nothing on their mortgage and willingly goes into foreclosure so that they can go out to eat, go on airboat rides, and gamble at the Hard Rock Casino.

Part of this is thanks to Democrats and Obama in particular. The endless demonizing of Wall Street and banks and big business has given people like these bums a ready-made excuse to stop paying their mortgages, yet still expect to live in their house. These people said so themselves. The banks are crooks. Lenders are greedy. They’re getting what’s coming to them, right? No one forced these people to take these loans, no one made them refinance, but it’s always someone else’s fault.

I understand that people sometimes fall on hard times. Honest people don’t use that as an excuse to abandon all responsibility and ignore their own bad decision-making. What is happening here is theft and the lowlifes should be thrown out on the street where they belong.

Hey, if they live on the street, they can still use their money on what really matters, like steak at Outback and gambling at a casino.

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Follow Cassy on Twitter and read more of her work at CassyFiano.com and Hard Corps Wife.

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Foreclosure Mediation Programs Succeed Across The Country — Will Pawlenty Give Minnesota’s A Chance?

Today, across the country, mortgage mediation programs aimed at helping struggling homeowners stay in their homes are getting underway. Programs are launching in Maryland, as well as Florida’s 6th and 10th judicial circuits — encompassing Pasco, Pinellas, Hardee, Highlands, and Polk counties — while Cook County, Illinois is beginning a huge round of outreach for its burgeoning program.

In all, “the number of jurisdictions with foreclosure mediation programs is nearly double the number a year ago, with jurisdictions in 21 states now offering foreclosure mediation or negotiation programs.” Not on this list, however, is Minnesota, where Gov. Tim Pawlenty (R) saw fit to veto a program last year.

The Minnesota state senate recently passed the bill again, sending it to the state House, so Pawlenty could very well get a second shot soon. And there’s simply no reason for him to oppose the program, as mediation — during which a bank meets face-to-face with a borrower, often in the presence of a judge and housing advocates, to try and forge a mortgage modification or other arrangement that prevents a foreclosure — is one of the most successful methods of helping struggling borrowers stay in their homes.

Connecticut’s mediation program, for instance, has kept 60 percent of its borrowers out of foreclosure. Philadelphia’s success rate is also 60 percent, while Nevada claims an 85 percent success rate:

About 80 percent of homeowners at risk of losing their homes don’t engage in any efforts to negotiate with their lender. And those who do so on their own often run into a bureaucratic mess, including hours on hold, lost records, and customer service representatives who know nothing about the borrower’s situation. Mediation helps to ensure that situations like that don’t happen.

“These new protections empower our fellow Marylanders, putting them on a more equal footing with mortgage companies that too often can’t be bothered to pick up the phone before beginning a foreclosure proceeding against a Maryland family,” said Governor Martin O’Malley (D). And lest Pawlenty think this is a purely partisan issue, it has also won the praise of Gov. Jodi Rell (R-CT). “Clearly, mediation is an effective tool homeowners can use to ward off foreclosure,” she said. “This program is a beacon of hope for hard-pressed homeowners and a real alternative for lenders.”

In mediation, there’s no requirement for a lender to accommodate a borrower, but it’s often the case that preventing a foreclosure is in the best financial interest of both the borrower and the lender. As CAP’s Andrew Jakabovics and Alon Cohen wrote, “the simple act of participating in mediation consistently yields solutions short of foreclosure that are acceptable to both sides.” Hopefully, should the Minnesota legislature do the right thing and create a program, Pawlenty will allow it to stand.

Mike Fuljenz Mike Fuljenz