Mortgage ‘Crisis’ Got You Down?

Consider Squatting in Your Own Home

Today the New York Times reports that governmental expectations that Fannie Mae and Freddie Mac will somehow keep the housing market afloat is starting to look like a pipe dream. With defaults and foreclosures rising drastically, administration officials, regulators and lawmakers are starting to get very nervous…

Will the next big taxpayer bailout have to go to these government-guaranteed mortgage giants? Well, since we got to bail out private investment bank Bear-Stearns, I’d guess so. Too bad we can’t bail out the families losing their homes.

Speaking of which, I got to wondering what happens to the people who lose their homes, given that the rental market is in just the same trouble. Is anybody keeping track of the homeless population? And if the person who used to own the home is now homeless because it’s been foreclosed, what’s the new designation for that family if they decide to simply stay where they are?

I did a little searching and found lots of news and opinion about how neighborhoods decimated by the mortgage crisis are now hosting increasing numbers of “squatters”. Here’s a CBS News video on that issue:

Seems cities simply can’t keep up with squatters living in foreclosed home, and once solidly middle and upper middle class neighborhoods are becoming squalid slums. In addition, CBS reports in The Frontlines of the Foreclosure Crisis that some scammers are offering foreclosed homes at places like Craigslist for rent, collecting money from them until the bank actually sends someone out to check the property. What this tells me about the situation is that the utility companies will actually set up accounts for squatters, meaning you can keep the electricity and water and phone going even if you’re just living there with no strings. Hmmm…

With just a little bit more surfing I found an article in the Wall Street Journal’s blog, Why Walk Away? Mortgage ‘Squatters’ Stay in Their Homes. Seems a report from a developer in South Florida maintains that some people in some of the very best neighborhoods ($2 million homes) have simply stopped making mortgage payments now that the value of their homes has decreased to drastically lower than they owe. Yet they’re staying put, essentially squatting in their luxury homes!

Thanks to a large backlog of foreclosure cases in the courts, they may get to stay in those homes for years before the banks can take action. Could middle class people hit by the crisis do the same thing? Virginia’s Rappahannock News blog asks that very question! In the entry entitled Squatting in Your Own Home, the opinion that squatting might just be the best option for those who have defaulted on sub-prime mortgages.

Staying put while still keeping up maintenance and utilities while the courts try to sort things out will not only keep the home from being vandalized and occupied by criminal elements, it also offers up to a year or more of time for the family to figure out what they’ll do next, possibly wait to see if federal bail-outs of the lenders might allow them to enter a new mortgage, or perhaps purchase the property anew once the credit is again available, for much less (and on better terms!) than what they had before.

So if you find yourself caught up in this ever-worsening mortgage disaster, take your time to look around at what’s real in your situation before loading the family into the car and heading for the state park campground. How many homes in your area are repossessed? How overloaded is the local court system? Is your banker a regular guy who might think it’s a fine idea if you stay to protect the property until things settle down? Would he dearly love to re-sell the house to you at a future date?

Carefully weigh your options. If you don’t have to be homeless, don’t make yourself homeless. If you could as easily squat in someone else’s repo home, you can probably squat in your own. The rich will come out of all this smelling like roses, it’s real people - real families - who are being ‘liquidated’ in this economic recession. Play your cards right (and be stubborn), and you might also come out the other end with a better deal than you had before!

Links:

Doubts Raised on Big Backers of Mortgages
Lenders Swamped by Foreclosures Let Squatters Stay
The Frontlines of the Foreclosure Crisis
Why Walk Away? Mortgage ‘Squatters’ Stay in Their Homes
Squatting in Your Own Home

Filed under Alternatives, Economic Recession, Housing, Surviving |