Should you keep paying your mortgage?
If you have significant equity in your home, absolutely.
If you don't, it's getting harder to answer that question, especially when
our government keeps giving people who owe more than their homes are worth
so many reasons not to pay.
...
Peter Schiff, president of Euro Pacific Capital, predicts that many
homeowners who have little or no equity will stop paying their mortgage
and then reduce their income to get the biggest payment cut possible. They
could stop working overtime or, if two spouses work, one could quit. After
the modification, they could try to boost their income again.
"This is a once-in-a-lifetime opportunity," Schiff says. "People are going
to feel like complete morons if they don't participate. The people getting
punished are the ones who never made an irresponsible decision to buy a
house they couldn't afford."
The government is offering loan servicers $800 for every homeowner they
get into the plan.
Schiff predicts that loan agents "will be cold-calling people trying to
get them into it. Just like they encouraged people to overstate their
income to get a bigger loan in the first place, now they will encourage
them to understate their income to qualify for a smaller loan."