How Long Can You Stay in Your Home After You Stop Paying the Mortgage?
Even though the economy seems to be getting better, the number of mortgage delinquencies is still rising. Some homeowners are choosing to walk away because their debts are much higher than what their houses are worth, and many others just cannot afford their mortgages any longer. Although I am not thinking of walking away from a mortgage, I wondered how long those who stop paying their mortgages can live in their homes before the lenders kick them out. Here are some real life examples of people who lived in their homes for months or even years after stopping payment.
According to this recent Wall Street Journal report, the Shickleys decided to stop paying their mortgage in August, 2009 and have not even received a default notice as of March 2010. That is a whole eight months of free housing and it is not over yet. This family stopped paying because they have an interest only mortgage and is now using their money to pay off other debts.
This man was featured in the CNN Life After Foreclosure slideshow and he vacated his home after not paying for the mortgage for 18 months. He feels that he "landed on his feet in just about every way." His mortgage was $5,600 a month and he moved his family into a $1,900 a month rental..
This Florida homeowner stopped paying for the mortgage on his 5,800 square foot home more than two years ago. He says that since his loan was sold to a new lender he doesn't have a contract with the new lender and does not have to pay the mortgage. He even started a company to help homeowners fight banks.
This airline mechanic stopped paying in June 2009, and was still living in his residence in February 2010. He said his bank has not filed a notice of sale and expects to live there until May 2010.
These are just a few of the many homeowners who decided to stop their mortgage payments. Although these few cases are by no means conclusive, the general political and corporate policies of the present are stretching out the length of time people get to stay in their houses after stopping payments. Some homeowners are even finding that they were not foreclosed on after they moved out because banks deemed their properties to be too costly to take back.
Recently Paul Michael of Wise Bread wrote about his thoughts on walking away from his mortgage, and if he really does it I would be interested to read about how long it takes the bank to actually get to the stage of eviction. Are you more likely to walk away from your underwater mortgage knowing that you could possibly live in the home for another two years?