Faking a Foreclosure?
I heard a story on Minnesota Public Radio by Jessica Madore that just about, at first blush, made me fall off the couch. You can give it a listen HERE.
It’s the idea of good credit homeowner backlash. It goes like this: People who have been paying their mortgages all along get fed up that their neighbors’ mortgages are now subsidized by the government. And they want in.
You probably have heard that lenders don’t even talk about lowering a payment unless you’ve missed a few or at least been late. (This is mostly true, but Citibank announced earlier this month that they are willing to talk to mortgage holders who are current, but the idea of the program is aimed at those with financial hardship. You can read more about Citibank’s Homeowner Assistance Program here.)
Apparently there are folks out there talking about muddying up their credit with some late payments to get into lower rate & payment talks with their lender. I can kinda see where they’re coming from, but it’s nowhere I want to go. I mean, foreclosure, while more common now is STILL a big deal.
And let’s suppose one does decide to “skip a payment.” The next payment one makes will be credited to the month that was “skipped” - so suddenly, that homeowner is delinquent on the month just paid. So once you miss a payment, you’re a month late every month until that “skipped” amount is paid.
Sadly, if you’re not on top of this, this could go on for months before one realizes that they’ve been in the rears for months - all the while trashing their credit. Then when they need a loan for something like a car and they’re “high risk” and paying the price. And it takes years to rebuild from a mistake like that.
So does it suck sometimes to do the right thing? Yeah, it does. That’s about all I can say.
December 4th, 2008 at 9:50 am
Good Post - I just had a chance to read it.