Posted on 03/03/2010 5:39:05 AM PST by EBH
To walk, or not to walk?
That is the question for nearly a quarter of US homeowners who can still make their mortgage payments but are “underwater,” or living in a house worth less than the amount they owe on the mortgage.
Should such homeowners with “negative equity” simply pack up and leave, mailing the house keys to their lender in a desperate act known as “jingle mail”?
Or should they honor the “promise to pay” in their loan contract and keep up with monthly payments, hoping for steady growth in home prices?
...But by and large, many “underwater” Americans need help to think through the difficult moral reasoning of whether to default – and to understand that society can only thrive on the integrity of each individual honoring a debt obligation.
(Excerpt) Read more at csmonitor.com ...
I have read articles that say the reason more banks aren’t taking the smart business step and renegotiating is that they are overwhelmed by all the defaults. They were blind sided by this and don’t have the staffs or expertise to deal with it. There are specialty firms popping up just to take this burden off their hands. That is an encouraging sign that under the dead weight of government there is still a dynamic enterprising core waiting to blossom.
I have been telling people that for 30 years. A house is a lifestyle choice. I only bought my first house when I had my first kid. I looked at it as the cost of being a good parent.
Yes, you absolutely are. The question was whether someone was morally obligated, not a straight up business decision question. It is not the same thing in this case.
What is the "right" thing to do? Do you stand by your signature and oath or do you walk away and be "free" from your obligations?
Even if you are playing Monopoly you have a moral obligation to follow the (arbitrary) rules.
Who would you admire more? Abe Lincoln who walked 10 miles to return the money to a customer he accidentally short changed or someone who shrugged his solders and pocked the money? BTW that was a shrewd business move by Abe too. Bet that guy became a loyal customer and spread the news that Abe could be trusted.
Impossible to make that blanket statement. If the house is in a declining neighborhood it could be an economic time bomb for you.
Game on baby.... give me a million bucks to stay afloat and I may continue to play the boardgame. Otherwise I will stick with the law to screw over the lender if necessary.
What, is everyone on this board deluded that the banks are somehow virtuous? Please. Only reason I didn't become a banker is because I'd have to move to the big city to make the real cash. They are a nasty bunch.
And when the dealer loses the taxpayer covers his end... but the player has to still pay the loses.
nonsense.
You have a moral obligation to protect your family from financial hooligans. Follow the law.
What in the hell are you talking about? All mortgages are scams? You are nutz!
Read my posts. I said banks have the moral obligation to renegotiate. If they don’t that means they are acting immorally.
Are you so deluded that all bank/bankers are somehow evil, Mr Marx?
I paid 228k for a condo in northern VA in the fall of 05. Now, the property tax assessment for 2010 says it’s only worth 79k. To rent it out would only cover half the mortgage and condo fees. I’m miserably stuck.
I have a bridge to sell you in Mahattan ... should I call you Patsy or Mark?
At any rate I will gladly take your money if you want to waste it.... I’m a pure capitalist.
I totally agree; they have a moral obligation to negotiate.
And that is where it hurts society and business. If people decide their obligations hold no moral responsiblity to uphold, then the business system collapses. The laws in many cases are there to insure the integrity of the system.
A lot of people are stuck with few options and no lenders wanting to speak about re negotiating.
So which of the two is not borrowing money from someone to buy something and them being expected to repay that money?
Exactly. And the lender takes the intial risk... but by accepting tax payer monies for “to big to fail” the game ends. There is no longer any obligation morally.
“What is the “right” thing to do? Do you stand by your signature and oath or do you walk away and be “free” from your obligations?”
You took no oath when you signed the load documents, this is a business transaction not some goofy oath! The terms are quite simple, the bank leads you the money and uses the house as collateral so that if you quit paying they can recover their money by foreclosing on the house and reselling it. The bank used to require that you put 20% down AND did an assessment of the value of the house BEFORE they risked their money so that they were assured of getting their capital back.
Somewhere along the way the banks lost their collective minds (mostly because they were reselling the loans to Wall Street so felt they did not have to follow good banking requirements) and started lending without any sort of thought to the market or the economy going down. Now we all are paying for it. So no this has nothing to do with morals, if you are upside down on a house and thinking about this talk to a lawyer because in some states they will come after you for any money owed that could not be recovered by the sale of the house.
Good thing to look at when you are shopping for a mortgage - is this company have a history of being totally inflexible in the face of titanic economic shifts? Then maybe 1/8 of a point lower interest isn’t a good deal.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.