'Cash poor homeowners who are trying to avoid foreclosures and higher mortgage payments are causing insurance fraud investigators to brace for what could be an epidemic of residential arsons.  Suspected residential arsons in California have already increased 50% from 2006. While reported arsons do not amount to significant numbers yet, EFI Global fire investigator Alex Ahart commented, “'I don’t believe that it’s had time to ripple through the market yet to the point many people have reached that point of desperation, but I absolutely think it’s coming.'” , said a recent MBA article.

Please, please do not even consider this arson-thing as some type of answer to mortgage related problems you may be having! This is fraught with trouble and potential danger to someone fighting or someone getting caught in a fire. Moreover, such a scheme could very possibly land you in jail for having committed a very serious crime. On top of that, the insurance coverage you have (if you even received a payment) would probably not be enough to pay off your mortgage.

The run up in home prices was based more on land value escalation than the actual home that sits on the property. In many cases, a home that cost $750,000 would cost only $350-400,000 to re-build if it burned to the ground. If you have a $600,000 loan it would still leave you $200,000-250,000 short of being able to pay off the remaining loan balance.

As a borrower, you would be far better off to approach your lender pro-actively to discuss potential solutions for what is known in the industry as a “workout” plan. Not all lenders will agree to a workout, but some do. If you let a lender know your situation, you have a better chance of finding a solution than if you were to resort to a desperate measure such as arson.