The Responsibility Vaccuum

Yahoo finance ran a piece on how home owners facing foreclosure are sitting on their homes, paying nothing for over a year and saving up their payments. With so many homes in foreclosure it often takes the banks and the courts as many as 500+ days to get people out of their homes and complete the foreclosure process. So people are living in the homes payment free for well over a year and saving up or spending their payment on other things. Check out some of their quotes,

For Alex Pemberton and Susan Reboyras, foreclosure is becoming a way of life — something they did not want but are in no hurry to get out of.

Foreclosure has allowed them to stabilize the family business. Go to Outback occasionally for a steak. Take their gas-guzzling airboat out for the weekend. Visit the Hard Rock Casino.

“Instead of the house dragging us down, it’s become a life raft,” said Mr. Pemberton, who stopped paying the mortgage on their house here last summer. “It’s really been a blessing.”

Or how about this…

One reason the house is worth so much less than the debt is because of the real estate crash. But the couple also refinanced at the height of the market, taking out cash to buy a truck they used as a contest prize for their hired animal trappers.

It was a stupid move by their lender, according to Mr. Pemberton. “They went outside their own guidelines on debt to income,” he said. “And when they did, they put themselves in jeopardy.”

His mother, Wendy Pemberton, who has been cutting hair at the same barber shop for 30 years, has been in default since spring 2008. Mrs. Pemberton, 68, refinanced several times during the boom but says she benefited only once, when she got enough money for a new roof. The other times, she said, unscrupulous salesmen promised her lower rates but simply charged her high fees.

I live in the same city these people do. I don’t know them and I am not hear to attack them. But I am here to say it is time for a reality check. If you can’t make good on your debts you have to walk away and do the morally upright thing. I know this is not an easy answer or something someone would want to hear but it is the right thing to do. Call me old fashioned but anytime I have signed my name to a contract I understood that I was taking on risk. When Missy and I bought our home in 2006, just before the real estate bubble burst, we took it very seriously. Honestly, it scared us to sign up for that much debt. No one twisted my arm. No one threatened me to sign it. It was our decision and we have kept our word. You can’t pass the buck of responsibility on to the bank. It wasn’t the bank that went outside their guidelines. We all should have our own personal guidelines for how much debt we can responsibly take on and how much is too much. Toss on that a refinance to fund a promotional prize giveaway event? In times like these we have no one to blame but ourselves.

It is time we took responsibility back as a nation. People want zero risk but all the benefit. People want the government to come in and take care of everything, clean it all up. In the process we lose freedom. We lose our ability to make choices and decisions. We cannot and should not sacrifice freedom and individual responsibility at the cost of our freedom.