Property Rights Or Entitlement? You Have to Pay to Stay!

I got a call from a homeowner who found my number on the internet. He’s called me before to ask he can get started in real estate investing. On this call, he was asking if I knew any magic answers for homeowners who are behind on mortgages and dealing with the banks. You see, this man was out of work for almost 20 months, stopped paying his mortgage 12 months ago, and is still living in what he says describes as a $220,000 home. While he, thankfully, now has a job, his take home pay is half of what he formerly made. He said that Chase promised to restructure his loan and instructed him to stop paying his mortgage a year ago, while they processed the paperwork. I have no doubt they really told him this, as I have heard the same story from many other distressed homeowners. The thing is, without a job, this man won’t qualify for a loan modification.

When I shared my concern with him, he said that is exactly what he eventually found out. I shared with him that just the  week before, Chase approved a short sale for a seller I am working with, and I asked if he had considered selling his home. He replied that that was not an option, because without this home, he would be sleeping in the streets. I asked if he had considered taking in roommates. He scoffed at that, saying, he had done that before and it didn’t turn out so well. I suggested that maybe it is time to consider downsizing to a less expensive home, or even an apartment, since he does have a job now. For whatever reason, this person feels he should be able to stay in his home, without making payments, until he is able to secure a higher paying job. I can understand the anger this man feels, having been strung along with false promises by Chase Bank. What I can’t understand is the feeling of entitlement that the shareholders of Chase should carry the cost of the mortgage for this man indefinitely because he can no longer afford to pay his mortgage.

What do you think? Was I wrong to suggest this person might want to consider taking in roommates or downsizing to a less expensive home? Should the banks allow unemployed homeowners to say in their homes indefinitely, incurring more debt on homes that are already under water?