Playing the System

Some folks in default on their loans have simply made the decision to not pay their banks, dare the courts to throw them out, and are spending the money on themselves. It's sort of a do-it-yourself loan modification.

For Alex Pemberton and Susan Reboyras, foreclosure is becoming a way of life — something they did not want but are in no hurry to get out of.

Foreclosure has allowed them to stabilize the family business. Go to Outback occasionally for a steak. Take their gas-guzzling airboat out for the weekend. Visit the Hard Rock Casino.

“Instead of the house dragging us down, it’s become a life raft,” said Mr. Pemberton, who stopped paying the mortgage on their house here last summer. “It’s really been a blessing.”

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.

This type of modification does not beg for a lender’s permission but is delivered as an ultimatum: Force me out if you can. Any moral qualms are overshadowed by a conviction that the banks created the crisis by snookering homeowners with loans that got them in over their heads.

“I tried to explain my situation to the lender, but they wouldn’t help,” said Mr. Pemberton’s mother, Wendy Pemberton, herself in foreclosure on a small house a few blocks away from her son’s. She stopped paying her mortgage two years ago after a bout with lung cancer. “They’re all crooks.”

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.

It's one thing to ask for a renegotiation of your loan deal to try to keep your house. That is trying to make the best of a tough decision in an honest way. It's another thing to just flat out quit paying the bank anything and just spend your money on yourself. That is theft and gaming the system.

Part of the fallout from Obama demonizing Wall Street and banks in general is that some folks will take that attitude as a justification to default on their loans and use the "their all crooks" argument to justify it in their mind.

Remember, nobody forced these people to take these loans. The did have choices and took the money gladly. Yes, the situation is tragic for all concerned. But when you just openly refuse to pay anything and continue on living as if you own the place with no intention of ever paying a dime you lose my sympathy and make me root for the eviction notices to fly. That is theft of services.

Call me cruel, but I would hope that the courts in question would move these folks up to the front of the eviction hearing list and throw them out but quick.