Homemade Mortgage Modifications

The AP is pretty bizarre about their excerpting/linking policies, so I’ll just grab a few snippets from this mindblowing story about how people are thumbing their noses at the foreclosure threat and carrying on as though everything’s fine.

For starters, how about this little nugget (emphasis mine)?

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.

How are they getting away with this Shaq-sized bout of denial?

Foreclosure procedures have been initiated against 1.7 million of the nation’s households. The pace of resolving these problem loans is slow and getting slower because of legal challenges, foreclosure moratoriums, government pressure to offer modifications and the inability of the lenders to cope with so many souring mortgages.

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.

438 days living in the “foreclosure process” allows people plenty of time to get used to it and to go on with their regularly-scheduled course of consumption.  Flat screen TVs, dinner and a movie – all purchases that we’ve been pointing to as ‘signs of a recovery’.

Do the banks deserve it?  Maybe a little, but for certain this is evidence of the ‘Extend and Pretend’ folly that’s probably keeping a real recovery from getting underway.

Source:

Owners Stop Paying Mortgages…And Stop Fretting About It  (AP via Yahoo)

* Update:  Article was actually from the New York Times originally, written by Dan Streitfeld (thx Sean)