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you may be right about the 2 schools of thought...I think it is upbringing. Personally, I think deliberately walking away from an obligation is not the right thing to do. Just saying "others do it", "businesses do it" etc. is not a justification that makes it right.
Entering into a contract and then breaking it makes such people delinquents and failures, it doesn't make them heroes for making a good "business decision" as some are suggesting.
Personally I think credit is extended way too easily in this country. It wouldn't bother me as much if the entire risk of default due to bad lending decisions was borne by the lender but since now the taxpayers are on the hook for such things I think the entire lending industry should be seriously regulated and credit extension should be severely curtailed. The capacity to repay and previous payment histories should be verified thoroughly. Anyone with a negative history or insufficient income should not be extended any credit whatsoever. They should operate on a cash only basis.
yep K374-
I agree with you- you enter into a contract, you need to do the due diligence to make sure it works for you and your future. I simply cannot fathom walking away from your biggest asset.
While it may be "unethical" to walk away from a mortgage, a lot of these folks believed it could work for them because a loan officer/bank told them it could. Yes, their own stupidity, but still. "Everyone else is doing it".....
People that walk away from their mortgages are making a business decision. Just like banks and other businesses that default or go bankrupt. This business decision is based on their financial status, not what is "responsible".
I have a friend that is getting ready to walk away from his interest only turned fixed payment loan. It is $3000 a month. His room-mate has left, and he has been laid off as a mortgage broker. He has a daughter. If it means his daughter can eat and he can survive, he has no qualms walking away. It is a financial business decision for his family.
That's how I look at it, anyway.
Let' s examine the premises in your post. In the first paragraph you seem to be arguing that " a lot of these folks" were taken advantage of because they were financially illiterate, i.e. the "loan officer/bank told them they could".
Next, you provide an example of a MORTGAGE BROKER who over-leveraged himself and took out an interest-only loan. If anyone should have been knowledgeable about risk it should have been a mortgage broker.
Finally, since you brought his daughter into it, is this the kind of "business decision" that a parent should teach his daughter? Keep your commitments, but only if it doesn't involve a financial downside?
Hey, I never said that this was not an irresponsible act. Far from it. I'm just saying that many people who have lost their jobs and don't have savings to fall back on are going to walk away. They aren't thinking of how it will effect the rest of us, they are concerned about their situation alone.
Trust me, every chance I get, I tell him it was stupid to take that loan....and he was a mortgage broker!!! In the past five years he has made four times as much as me in salary, yet he is in debt to his eyeballs and I have none (except this house I'm trying to get into.....)
In any event, many in our society are looking at it as a business decision, and I can understand that. If I had a kid and couldn't afford the fat mortgage payment, I'm putting my kid over the Jones's taxes any day and twice on Sunday. I just hope I wouldn't get myself into a predicament such as that.
Let' s examine the premises in your post. In the first paragraph you seem to be arguing that " a lot of these folks" were taken advantage of because they were financially illiterate, i.e. the "loan officer/bank told them they could".
Next, you provide an example of a MORTGAGE BROKER who over-leveraged himself and took out an interest-only loan. If anyone should have been knowledgeable about risk it should have been a mortgage broker.
Finally, since you brought his daughter into it, is this the kind of "business decision" that a parent should teach his daughter? Keep your commitments, but only if it doesn't involve a financial downside?
No, I absolutely don't think this is a business decision he should teach his daughter. But again, if it's his survival against the rest, I'm guessing he's picking his. Just my opinion.
The right wing/libertarians who think defaulting on a mortgage is immoral and unethical.
Everybody else who thinks it a business decision.
The twain will never meet.
The costs have already been paid by the society. It is not a government thing and likely will not be. The costs are loss of value of property, of stock and bonds, of the dollar.
Direct government costs are pretty much negligible at this point. The proposed bail out will have some costs but likely not that great...but certainly none of those costs have yet been encountered.
We are familiar with your pompous tirades on Libertarians. Save it for your liberal friends that believe you can delegate away all individual responsibility to the government.
Location: Georgia, on the Florida line, right above Tallahassee
10,471 posts, read 15,778,959 times
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Responsibility is in the eye of the beholder.
Imagine this.... a doofus buys a home they can't afford. They realize they made a mistake. They realize if they keep paying that they are perpetuating the mistake.
Should he continue to perpetuate the mistake? Or should he stop perpetuating the mistake?
Now, comes the part where we say, "Who shall pay for his mistake?"
And the part where we say, "What if it was deliberate..and NOT a mistake?"
Two very different scenarios, but the end result is the same...someone has to pay for the mistake. I just hate being forced to pay for someone else's mistake. Yet, we do this every DAY, people. We do it with social programs, welfare..you name it - and we'll have a bandaid for it, in no time. We do it because that is what we do. We don't kill them. We don't put them in prison. We give them another chance. We social engineer another chance.
I seem to be a hypocrite. I don't have a problem giving someone another chance. But I have a problem with paying for that other chance. Hrmm..wonder if that makes me selfish. Or smug. Smugly selfish. Or selfishly smug. Maybe it makes me no different from many other people...who are just dieing to give your money up, but are painfully unwilling to part with their own cash.
Imagine this.... a doofus buys a home they can't afford. They realize they made a mistake. They realize if they keep paying that they are perpetuating the mistake.
Should he continue to perpetuate the mistake? Or should he stop perpetuating the mistake?
Now, comes the part where we say, "Who shall pay for his mistake?"
And the part where we say, "What if it was deliberate..and NOT a mistake?"
Two very different scenarios, but the end result is the same...someone has to pay for the mistake. I just hate being forced to pay for someone else's mistake. Yet, we do this every DAY, people. We do it with social programs, welfare..you name it - and we'll have a bandaid for it, in no time. We do it because that is what we do. We don't kill them. We don't put them in prison. We give them another chance. We social engineer another chance.
I seem to be a hypocrite. I don't have a problem giving someone another chance. But I have a problem with paying for that other chance. Hrmm..wonder if that makes me selfish. Or smug. Smugly selfish. Or selfishly smug. Maybe it makes me no different from many other people...who are just dieing to give your money up, but are painfully unwilling to part with their own cash.
Now I'm self-loathingly smugly selfish.
Great.
When (not if) Fannie/Freddie are dissolved and the approximately 10 year long mortgage securitization fad ends, the real punishment will be absorbed by potential mortgage borrowers (who have to secure private one-on-one lending without a secondary market) and homeowners.
Get out of dollars and US residential real estate before its too late.
We are familiar with your pompous tirades on Libertarians. Save it for your liberal friends that believe you can delegate away all individual responsibility to the government.
Libertarian calling others pompous? The mind boggles.
Never have so few with so little made so much noise.
I note you actually make no refutation...just attack the messenger.
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