Squatters Income Adding Adding Billions in Disposable Income

I've been wondering what happens when someone decides they don't want to pay their mortgage but stays in their house. Do they get to live mortgage- free during this period? It turns out the answer is yes. The term for this is squatter's income and it's pumping billions of dollars into the economy. As the chart below shows, a homeowner can extract tens of thousands of dollars from their home and then not pay their mortgage for up to 800 days. That's almost three years of free living. And if a homeowner gets a mortgage modification at the end of the 800 days, the entire process can be reset.

According to a report from the Office of the Comptroller of the Currency and the Office of Thrift Supervision over 50% of mortgage modifications defaulted after nine months. So that's an awful lot of free living. And considering the fact that many of these banks are taxpayer supported, that's an awul lot of living on the public dole.

JP Morgan Chase estimates $1.1 trillion of defaulted mortgages are generating billions in squatter's income. Homeowners that don't have to pay a mortgage have a lot more disposable income. It's another example of how irresponsible homeowners have been able to bilk the rest of the country.