-by the Mysterious Flying Miser

Kermit Arnold, a 47-year-old business consultant from McLean, Virginia, has been living in his condo for 8 months without making a single mortgage payment, but his lender has yet to kick him out. He purchased the condo in 2004, but couldn’t keep up with the $2400 monthly payments when unexpected health problems arose. “In the midst of funding my business expansion in 2008, I developed some severe health problems, which then necessitated long term chemotherapy, which is still ongoing. For about eight months I had no income, was still paying business expenses, and had many large medical bills. Even with good insurance, the costs mount quickly. I even appealed to my church for financial assistance and received some,” says Arnold.

Arnold thinks he will be forced to move in about 2 more months, but he can’t get a straight answer from his loan servicer. He tried to restructure his loan, but the restructuring was put off while waiting for new legislation to take effect. Since then, he has gotten conflicting information about the status of his loan, and his attorney has not been able to clarify the matter any further. Kermit hopes his problems may be solved, saying “I’m sure part of the issue is the sheer volume of this problem nationwide, although I was not one of those who took out a loan I couldn’t afford or was speculating. I may yet learn that I made it through the pipeline and now have a restructured loan with a lower payment and no arrears. In some ways, it would be easier to have bad news rather than no news.”

Elizabeth Lake, on the other hand, has always paid her bills, but her neighbors haven’t. A 30-year-old public relations representative, she questions her neighbors’ integrity. She says the couple (in their late 50s or early 60s) moved to Reno from out of state in spring of 2006, and were initially upset to find rented homes in the neighborhood. They complained of the cars parked on the street, for instance. Since then, they have moved out, stopped paying the mortgage, and are now collecting rent from their new tenants (a couple in their early 30s with two kids).

Lake believes her neighbors haven’t paid their mortgage for about 6 months. The tenants told her they received notices via certified mail that the payments are behind and there is a possibility of foreclosure. When asked why the delinquent couple stopped paying the bill, Lake says “My observation is that they stopped paying because the husband took a job out of state, and the wife eventually ended up moving to be with him, and now they are paying rent on top of having their mortgage – they (like the rest of us who bought during that horrible time) are aware of how much the value has decreased in their home, and my guess is that they figured the easiest/best way out is to just let the house go. Better for them to deal with a little bad credit than be stuck with a house they weren’t ever planning on living in again.” She says the tenants are considering buying the house in a short sale.

Says Lake: “I’m frankly disturbed by the situation. I think it’s really shady for someone (in this situation) to be taking money from a renter and not put it toward the mortgage. Every month, they have been taking that money knowing they are not using it to make their house payments. I just think it’s wrong and puts the renters in a bad position. The renters basically will get kicked out of the home, unless of course the short sale option works out. It also bothers me because I feel it has an impact on my home and the rest of the neighborhood – the renters made a comment about how they’re continuing to let the yard go (looks horrible, weeds, dead grass, etc.) so that, when the house is appraised, they can get the lowest price possible on the short sale. I can see why they would want to do this to help themselves, but again, it’s affecting the whole neighborhood.

“As far as how I feel personally/morally about the whole situation (and the fact that this is happening all over America) is that people really disappoint me. I guess it bothers me that I am in a home that is now worth ½ of what we paid for it, but I’m not just jumping on the bandwagon and taking the easy way out. I think people need to be more responsible and follow through with the actions they initiated when purchasing a home for such a price. Don’t get me wrong, I do sympathize with those who are truly having a hard time and cannot make their payments (those that got caught up in the greed from the banks/lenders), but I know several instances (even friends of mine) who are just walking away like it’s no big deal. I think it’s wrong and irresponsible. I think it’s eventually going to affect those of us who are continuing to be responsible and dealing with the mess we got ourselves into. We can’t even refinance our home because its value is so low compared to what we owe on it.

“I found it interesting that the home owners never even gave the renters a heads up that they were not paying the mortgage (but I guess that was the whole point – take the money and run!). I think they could have at least gone to them and told them their situation was bad and that they couldn’t pay, and maybe tried to work out some kind of sale deal (or at least let them know they could be evicted). I believe the renters actually had to contact the owners when they got the notices to get them to fess up to it.”