As a Northern Virginia Short Sale Listing Agent, I meet plenty of families who have fallen on hard times and find themselves unable to pay their mortgage and upside down in their homes. Most of the families I meet are struggling to do the right thing by their families and their mortgage companies. They fear what happens after a short sale or foreclosure. They want to prepare for their next move and not have a rug pulled from underneath them.
Then there are families I meet where a legitimate hardship turns into living housing payment free for as long as possible, and stockpiling cash. Allow me to give you an example.
I met a client nearly two years ago who was behind on his mortgage payments and facing foreclosure. Having been turned down for loan modifcation, he turned to short sale. 
And sure enough, we were able to stop the sale of his property, but not get final approval on the short sale. Why? The second trust would not approve it...and with good reason.
Turns out this short sale seller had taken a $70,000 home equity line and still had about half of it his bank account. The lender wanted at least a portion of the money back. No dice. This seller hid the money under someone else's name and refused to cooperate.
A year later, after being accepted for loan modification, but refusing to participate because the bank refused to lower his principal balance, this seller contacted me again to help him pursue a short sale. We had a heart to heart. I told him that the second trust was likely to ask for some of that equity line back again, and he said he was committed to making it work and would pay them what they wanted.
Wrong! When the rubber met the road, he refused. For someone who had lived rent free for eighteen months, he was right back into the mentality of, "Mine! Mine!"
Two years since the first missed mortgage payment, the former short sale seller declared bankruptcy and his home went to foreclosure. He had been stockpiling money for two years while he waited for the end of the ride. Meanwhile, he had a wife and two minor aged daughters. With an eviction date from his home looming, this gentleman seems clueless as to what is about to happen to his family. He called for help to find a rental. When advised he would have to put up a minimum of two months rent in security deposit to overcome the lack of monthly housing payment and a lack of credit history with the recent bankruptcy, he was defiant. He wanted to negotiate. Negotiate down rental prices, security deposits and other fees.
Needless to say, this man was in no position to negotiate. As a result, he was viewed as a poor credit risk.
Now, as the clock winds closer to eviction day, and he has no home to go to, he is finally coming around. Sadly, it may be too late to keep his young duaghters in their school district. With only days left and few rentals to choose from, his daughters will be uprooted to another school system. Had he taken my advice and found a rental in his daughter's school district as it came available. At the time, his answer to that suggestion was, "Why would I do that when I can live here till the bank kicks me out?"
In retrospect the answers are easy to give:
Stability for his family
Less time spent not making a monthly payment, thus being seen as less of a credit risk
And most importantly--CONTROL OF THE PROCESS.
Living housing payment free has it's allure, but beware the consequences.
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