Posted by Karl Denninger
Feb. 25 (Bloomberg) — The Obama administration may expand efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the government’s Home Affordable Modification Program.
The proposal, reviewed by lenders last week on a White House conference call, “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed,” according to a Treasury Department document outlining the plan.
Contract rights don’t matter, law doesn’t matter, we’ll just ignore all of that pesky stuff when we don’t like it.
Should this come to pass the obvious thing for everyone in this country who is underwater to do is to default. On purpose. The resulting flood of defaults will bury the banks with the HAMP “review” requirement for literal years, allowing you to stay in a free house for that amount of time.
During that time you can save a lot of money (your entire mortgage payment) or live high on the hog on the money you would otherwise send to the bank.
Of course you should consult with counsel before doing this, but this sort of change, if Obama actually does it, should be expected to provoke exactly that response.
If I was underwater on my house and had a non-recourse loan, the day this went into effect I’d burn the payment book and send a picture of it on fire to the bank along with a photograph of my ass bearing a hand-scrawled “kiss it!”