In gambling, there are two keys to winning. The first one is knowing when to walk away. Number two is just don’t play. Unless you’re Rain Man, eventually you will loose. How much and how often you lose is determined by your aversion to risk.

More and more California homeowners are playing the foreclosure lottery. However in this game, there doesn’t appear to be any chance of a winning payoff. Possibly the only opportunity is to sit a while longer at the table and enjoy a round or two on the house. But in the end, you will lose and probably lose big.

Who hasn’t purchased a lottery ticket? When the jackpot climbs to over $100 Million, many decide to go against better judgment and plop down $5 for a quick pick. Why are so many California homeowner’s gambling their homes and credit as if it were a $5 lottery ticket?

Is the Threat of Foreclosure a Conditioned Response?

Has the finality of foreclosure ceased to be a threat? With many people in the foreclosure queue, continuing delays, bank moratoriums, refiling of Notice of Defaults and monthly postponements may have convinced consumers that their pending foreclosure is on hold for an indefinite amount of time. What appears to be happening to these homeowners is they have become pawns in a game which allows a short term gain in exchange for a more perilous penalty when the bank finally decides to pull the lifeline of support. The only question is when is the lifeline going to be pulled?

Banks and other lending institutions have lulled the consumer into a false sense of security that something will be done or worked out to keep you in your home, when they should have been actively encouraging homeowners to look for other alternatives. Alternatives that would lessen the negative impact of foreclosure and allow for a planned exit. Anyone ever heard of a short sale? Instead they seem to consider the 15 month moratorium a “gift” that allows the inhabitants to live mortgage free until they deem its time to go ahead and pull the foreclosure trigger.

I look at the number of foreclosures in the Pasadena, South Pasadena and Altadena area’s and I cannot understand why some people lose their home in 6 months while others have been on the list for a year and a half and are once again delayed for another month. Issues involving court decisions and Civil Rights have long focused on Housing Discrimination. Would anyone like to tackle the perceived inequity that so frequently seems to involve the issue that says, “Sorry Mr. & Mrs. Smith but today is your day. However the Johnson’s have another 30 days?”

Time to Quit Postponing the Inevitable

There is a much fanfare and lip service being paid to loan modifications which seem to be generating only a limited number of success. Homeowners receiving a “Notice of Default” are given specific instructions stating that unless the debt is cured the house will be sold to satisfy the debt. That in itself is very definitive. But with extension after extension the message looses its meaning. Homeowners should also be advised to seek out the possibility of conducting a short sale as a more favorable option versus a foreclosure. If banks don’t want to repossess the house, they seem to be doing a poor job of informing their customers of the available options.

But then again, maybe the banks like stacking the odds in favor of the house.