Imagine living at home and paying no mortgage, interest or taxes. That may sound like some late-night TV commercial, but millions of people are doing just that—the silver lining to having their homes in the foreclosure process.
It’s not easy to estimate exactly how much money these folks are not spending on housing, but a good guess is $42 billion a year. Assuming they’re spending it on other things, they’re chipping in about 10% of the nation’s total retail sales. In other words, they’re a surprisingly important force for the economy.
Nearly 1.9 million homes had some form of foreclosure filing upon them at the end of last year, according to RealtyTrac. Because of bottlenecks caused by the Robo-signing mess and legal battles, people in foreclosure have been able to stay put for long stretches. The foreclosure process rose from 281 days in the third quarter of 2010, to 348 days by the end of 2011. In Florida it’s 806 days. In New York, the average stay is a stunning 1,019 days. Until actually foreclosed, people stay in their homes for free.
You get to roughly $42 billion in savings by multiplying the portion of mortgages in foreclosure (4.38% of all homes) by total annual payments of mortgage and taxes (about $970 million).