Can't Make the Mortgage Payment? No Problem!

For more and more families around the country, going into intentional foreclosure has been nothing short of a blessing.

"We could pay the mortgage company way more than the house is worth and starve to death. Or we could pay ourselves so our business could sustain us and people who work for us over a long period of time. It may sound very horrible, but it comes down to a self-preservation thing," St. Petersburg homeowner Alex Pemberton recently told the New York Times.

You might think the banks would be working overtime to cash in on mounting foreclosures, but you're underestimating just how many people have started defaulting on payments. A whopping 1.7 million households are currently in foreclosure, and non-paying borrowers are, on average, 438 days delinquent in payments before being evicted. For comparison, in January 2008, the average lag time between defaulting and eviction was 251 days. Some 650,000 households have not made mortgage payments in the last 18 months. In nearly 20 percent of those cases, the lender hasn't taken any action to repossess the property. Lenders simply can't keep up the overwhelming downturn, the cases are jamming up the courts, and homeowners are finally able to reap some of the benefits of the long wait times and overburdened banks.

Wendy Pemberton, Alex's 68-year-old mother, is taking advantage of her foreclosure period of reprieve and says that the longer she's in foreclosure — with the banks off her back and her finances turned toward rebuilding other aspects of her life — the better off she'll be.

It isn't as if the banks have been accommodating. Unlike some businesses that might take whatever payments were manageable, foreclosure victim Jim Tsiogas said his bank was unwilling to budge on his owed monthly amount. When he stopped paying altogether, they suddenly wanted to bargain, but by then, Tsiogas was getting used to using the money for other things. "I need another year and I'm going to be pretty comfortable," he said.

To be sure, there are risks associated with essentially walking away from your payments. But the benefits seem to far outweigh the drawbacks, and New York magazine has already dubbed the defaulters "the first genuine heroes of the recession". A few others — like Time.com's "It's Your Money" blog, which has a history of rather shocking economic victim-blaming and called the Times piece "free rent" — seem to miss the point of strategic mortgage default. This isn't a fun way to save money for vacation. This is about survival.

Quite frankly, letting your own home go into foreclosure is not against the law. You may have signed a promissory note, but if you can't pay, well, you can't pay. If it doesn't sit right with your ethical framework, ask yourself: with bills piling up, no relief in sight, what the hell would you do? Most people commenting on these things have never had to deal with such a difficult dilemma. Let's hope that if bad luck comes their way, they've have enough hindsight to humble themselves and admit they were wrong. We promise we won't judge them for their survival.

Photo credit: d Licht, NotionsCapital.com