Housing experts figure that roughly 40 percent of the people who would normally put their houses up for sale, are unable to do so because they are still underwater on their mortgage and the amount they’d get from the sale would require them to borrow money to pay the balance. Who wants to do that? It’s cheaper to just stay in the house and stop making the mortgage payment, which is what millions of people have done. Now they’re waiting for the bank to foreclose, but the banks are in no hurry because foreclosing would just add to their mountain of distressed inventory which would push prices down further. So millions of delinquent borrowers are presently living in their homes for free as they have been for the last two or three years.
~ from US Housing: Is the Recovery Real? by Mike Whitney ~
Whitney describes where I am at right now. I haven't made a mortgage payment since November and I am waiting to see if USDA will allow me to put our house on the market for a short sale (about the only way it will sell in a depressed area like this). I am used to trying my best to pay my debts and so not making our scheduled monthly mortgage payments is new and uncomfortable territory.
I initially worried that this strategy might leave me on the streets in no time at all, but more than one person at USDA has told me that their foreclosure process can take up to 18 months. We plan to be somewhere else no later than September 1 for Della's next AmeriCorps assignment, so we should be able to turn in our house keys to USDA long before that point.
From my many conversations with USDA personnel, Della and I are not alone in this boat. The high rates of unemployment and the reduction in government services have significantly impacted poor people. (What a surprise!) Even though USDA mortgages are subsidized ones, many of us find ourselves unable to keep up.
And so, I sit in a house I am no longer making payments on. I am a freeloader, but not a freeloader by choice.