1. Home (Free) on the Range

    You want stimulus? Well, how ’bout the chance to go almost 15 months without a house payment?

    Thanks to cottony-soft (and FedGov encouraged) accounting standards, banks are loathe to foreclose on underwater properties. As a bank, realizing five- and six-digit losses is no fun. It tends to leave ouchies on your balance sheet, and more importantly, has a negative effect on management bonuses.

    Cause, meet effect:

    Defaulted borrowers were spending an average of 469 days in their home after ceasing to make payments as of July 31, so the financial attraction of strategic defaults increases.

    Four hundred days with no house payment? A fellow could save up quite a stash in his piggy bank, going that long without sending a check to the mortgage company.

    In any case, that tantalizing little snippet comes from an article at AmericanBanker.com.

    And speaking of homeowner savings, just imagine all the dutiful home care and maintenance being performed by all these “living free for now” borrowers — borrowers who know that one day the bank will be coming to throw their La-Z-Boy on the lawn and Master Lock all the doors. The question isn’t if, but when.

    Oh, I’m sure that leaky roof will get fixed. Any day now.

    Yes, indeed. Delaying foreclosures (most econ-types refer to it as “extend and pretend”) with schemes like relaxed accounting standards and FedGov-initiated can-kickings (HAMP much?) should work out just fine.

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  2. 3 Responses to "Home (Free) on the Range" ...

    1. On August 27, 2010 @ 4:34 pm,
      Barbara wrote:

      I get the feeling you think that we have a lot more problems coming in the housing world?



    2. On August 27, 2010 @ 7:01 pm,
      Denise wrote:

      40 months? Where are you seeing that?

      469 days is more like 15 months (still pretty impressive), and I’m not seeing any other reference to how long people are staying without paying. Is there a chart I’m missing?



    3. On August 27, 2010 @ 7:34 pm,
      Michael wrote:

      Ah, darn those basic maff skilz. Let’s go with 15 months. 🙂



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