Some people who can’t afford to fix their homes with crumbling concrete have just stopped paying their mortgages, and it could be a trend on the rise.
For most of us, deciding to default on your mortgage is unthinkable.
But these are desperate times for many homeowners with crumbling concrete in north central and eastern Connecticut, and to them, this is the only way out.
It took a lot just to get in a meeting with a sizable crowd, where homeowners listened to attorney Sarah Poriss. Some are considering walking away from their homes, and possibly being foreclosed upon, because they can’t afford to stay in them and fix concrete basements crumbling underneath them.
A woman who spoke with us on the condition she remain anonymous is about to take the plunge.
“I have to do it, I have no options,” she told NBC Connecticut Investigates.
Many people with crumbling concrete, a condition experts say is caused by a naturally occurring mineral in part of our state, are what’s called “underwater” on their mortgages.
Let’s say you have a house valued at $400,000, and you still owe $300,000 on your mortgage. Then you learn your basement has crumbling concrete, dropping the value of your home to $150,000. Now you owe twice what the home is worth.
“The number of calls I’m getting from people from this area of the state, who are asking the question, should I keep paying my mortgage, is growing by the day,” Poriss said.
Poriss explains it usually takes a bank six months to begin foreclosure proceedings after you stop paying a mortgage, and the foreclosure process takes another year or more. Meanwhile, you can bank the mortgage payment you were making.
“When you’re told you can stop paying a bill, it just rattles them. It’s the scariest thing, it’s the most foreign concept,” Poriss said.
Poriss adds walking away from your home mortgage will hurt your credit, but perhaps not as long as you might think.
“There’s no magic formula. I’ve talked to people who stopped paying their mortgage. A year or two later, I check in with them, ‘Oh we were able to buy a condo, we were able to buy another house’. Some people are lucky, and they don’t suffer major credit consequences, and some people do for longer,” Poriss said.
Even with that risk, for some, they believe it’s the only way out of what they consider insurmountable debt. A number of homeowners have tried suing the now defunct company believed to be the only manufacturer of the defective concrete, along with home insurance companies, but only a limited number have succeeded.
Data collected by NBC Connecticut Investigates indicates at least several dozen homeowners from the towns hit hardest by the crumbling concrete crisis have gone through with the foreclosure process.
That’s about one to three percent of all the people who have filed complaints with the state saying they have this problem
State Rep. Tom Delnicki represents South Windsor, one of the hardest hit towns, and is trying to stem what he considers a growing tide.
He sits on the state legislature’s banking committee, which has introduced several bills to help homeowners, including ones that will:
- Continue allowing homeowners to have mediation with banks where they can modify mortgage terms, at least temporarily.
- Encourage banks to offer low interest gap loans to assist with repairs not covered by a state program
- Prohibit lenders from getting a court order to collect additional money from homeowners that sell their homes with defective concrete for less than the amount of the outstanding mortgage. It’s what’s known as a deficiency judgement.
“They don’t want to default. They just need some help to stay in that home, to get it back to the way it should be, and to put their lives back together. That is the key, putting their lives back together”, Delnicki said.
NBC Connecticut Investigates asked both the Connecticut Bankers Association, and the Connecticut Department of Banking, for an on camera interview about this trend, and Rep. Delnicki’s ideas about helping homeowners with crumbling basements. The association and the banking department only issued statements.
The Bankers Association said, “As we have been for the past several years, the state’s banking industry remains committed to finding solutions for homeowners—many of whom are our customers—who have been affected by crumbling foundations. Our number one priority remains working to keep them in their homes, and our members will continue in their diligence to work directly and compassionately with any customer facing foreclosure as a result of this issue. We are appreciative of the efforts of the legislature in its critical funding of $100 million for the creation of the Connecticut Foundations Solutions Indemnity Company, and will continue in our work with state and federal lawmakers to find additional relief for our customers and homeowners.”
The Connecticut Department of Banking said, “The Department of Banking stands ready to assist however we can and looks forward to collaborating with the any legislator who offers solutions to this crisis.”
Of course, before you think about walking away from a mortgage, you should consult an attorney first.