To Pay or Not To Pay (My Mortgage): An "Untroubled" Homeowner's Hardship Letter

After hearing the details of the latest proposed Federal Mortgage Aid Plan, do any other homeowners out there feel like you just won the un-lottery?

The plan reportedly targets “troubled borrowers“, roughly defined as those who have missed three mortgage payments or more. Starting in mid-December, many delinquent borrowers will be eligible to receive loan modifications that will cut their monthly payments down to 38% or less of their income.

This new plan, however, curiously fails to address the plight of over 10 million other homeowners who have kept up their payments while their homes continue to drastically drop in value. They, too, are extremely vulnerable to foreclosure.

That means that even if you’re not a delinquent borrower, you may very well, like me, be underwater on your mortgage with the prospects for your future financial situation becoming bleaker by the minute.

After waiting in vain for a rescue plan to address this growing problem, I thought maybe I should just write a hardship letter of my own.

So, here goes nothing:

Dear Treasury Secretary Henry Paulson:

I understand that you’ve been busy coming up with proposals to help borrowers facing foreclosure save their homes. But what about me?

I’ve never missed a mortgage payment, but I am certainly a troubled homeowner. I’m troubled because, like most of my neighbors, I currently owe much more on my house than it is worth.

It seems almost irresponsible to me to continue paying on a home that is losing value faster than President Bush‘s approval ratings. And the 7-year hit to my credit for a mortgage default would be like a gift compared the 10-15 years of payments I’d have to make just to get back the equity I had on the first day I purchased my home.

Basically, there is virtually no reason for me not to simply mail my house keys back to the bank, pack up my cat, and flee to the solace of the nearest luxury apartment community.

In fact, a part of me wants to do just that, but I’m hanging in there for a couple of reasons.

First, because I believe that stable homeowners are one of the last strongholds of this economy preventing us from slipping into a downturn much worse than the Great Depression.

And, secondly, because I have faith that the new administration will come up with an equitable solution to this crises…eventually.

Let me repeat. I have faith in the administration. So please don’t let me down.

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