5.28.2009

The year of living freely

Bloomberg:
The U.S. delinquency rate jumped to a seasonally adjusted 9.12 percent and the share of loans entering foreclosure rose to 1.37 percent, the Mortgage Bankers Association said today. Both figures are the highest in records going back to 1972.

Free rent for deadbeat homeowners. If the banks are going to delay foreclosure for at least a year due to political pressure, operational capacity, or a desire to delay loss recognition, you might as well take advantage of it, stop paying your mortgage, and live free for a year. And that's exactly what homedebtors are doing. Incentives, people. Incentives.

Bonus question: how much of a stimulative effect is there on the economy when 9% of mortgage debtors suddenly save the $1000 - $2000 per month they used to be wasting on a mortgage? Honey, I stopped paying the mortgage! Let's go to Disney World!

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