If your loan balance exceeds your home's value, stop paying your mortgage immediately. Remember, in the Bernanke/Pelosi/McCain world, the responsible get screwed, and the reckless get rewarded. If you stop paying your mortgage, your bank will either voluntary renegotiate the terms, or Congress will force them to do it. If you keep paying on an underwater house, you're just throwing good money after bad.October 2008:
You've already saved ten or twenty thousand dollars, and have you noticed that the bank is still not bothering you? Keep living rent-free. When the bank (or government) finally does get around to calling you, they'll be very nice and accommodative, and they'll negotiate a very nice principal reduction for you.
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. [...] Honey, I stopped paying the mortgage! Let's go to Disney World!June 2009:
In Bailout Nation, only the stupid honor their obligations. [...] If you still are paying your mortgage or credit card balances, look around the room. YOU are the sucker!
Today the New York Times published a story about the joys of not paying: Owners Stop Paying Mortgages, and Stop Fretting.
The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics.
And Angry Future Expat has more thoughts on the subject today.
I live in a condo complex of cheesey town homes. Several of our home owners are following your advice. They also quit paying their association assessments, leaving their neighbors to pay the freight, sometimes for years, while they live free. There's no way to recover most of that, even once the house is resold. We can't even cut off their water, trash collection or cable TV, which is paid for by the association. If we do we're breaking the law.
One lady burned her house down for a few thousand in household possession insurance, it took parts of her neighbor's houses with it. The real expense was when the firemen chopped holes in the roofs and poured the fire hoses down it. Cool. Police aren't even prosecuting her, they don't think it's worth it and don't want to clutter up prisons with people like her, since she's not a "real" criminal.
Now our fire insurance is sky high. These scumbags refinanced their houses over and over for years. They got so much money, a lot of them quit work and retired early.
Don't anybody out there buy a condo. Bad Juju.
I am pretty sure any of us paying rent and mortgages are morons.
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