On Walking Away
Is it okay to walk away from your mortgage for no other reason than it doesn’t make financial sense to keep throwing your hard-earned money away? There’s no universal answer here, but in most cases, the answer is “Yes.”Importantly, the reason is not that “Wall Street deserves it” or “We’ve got to teach the banks…
Denton – you missed something – when you walk away from your mortgage, the bank gets the house. Nobody is stiffing the bank – the agreement was, if I stop paying for the house, you can have the house.
Funny thing is I’ve seen Henry running around Prospect Park recently, but he seems to be getting fatter.
I actually posted a few times before I read the article, which I just did. And even tho I always thought Blodgett was a decent guy, after reading it you can see he’s just another Wall Street douchebag. Consider the following paragraph:
“Now, compare this to a situation in which you DO have a moral obligation to pay: When you borrow money from a friend at no interest, for example. THAT is a moral obligation to pay. In this case, your friend did not lend you money to make a profit. Your friend loaned you money as a favor–with no collateral or contract.”
Consider what he is saying. If my friend loaned me money at a reasonable rate of interest, maybe under market, or maybe at market, then I am under NO MORAL OBLIGATION to pay, according to this douche. Or, if just for a bit of self-protection, I signed a contract stating that I loaned my friend money, I am now EQUALLY under NO OBLIGATION to pay. Just because I got a receipt for my money.
Some fucking morality these guys have. And they don’t even realize what low-lifes they are, that’s what really fucked up.
“Regarding the issue of morality that Tybur6 and Montrose raise. I don’t think the decision to walk away, for a household, has a moral dimension.”
benson, I’m surprised at you. I would have thought you would be in the ‘man’s word is everything’ camp.
Lil’ flip=flopping going on here today. The Left is upholding a signature as word, and the Right is walking out on it! Altho I see dibs is leaning left today.
“Of course there’s an obligation to pay. BUT it is not moral. It is absolutely an ethical question. But the banks are to exercise some ethics too. And fractionalizing and diffusing your loan around the cosmos doesn’t give them much reason to excise healthy ethics or even good business.”
I disagree that this is not a moral issue. When I sign my name to a document, there may or may not be collateral involved, but my name means something. My signature means something. If I sign and don’t intend to do what I agreed to, then I am being immoral. Saying that ‘the bank sucks too’ is meaningless. I have to look in the mirror every day.
I guess this is why my credit score is considerably higher than rob’s.
Now, if I lose my job, my investments, everything else, and can no longer meet my obligations, but have done my best to fulfill them until calamity struck, then I agree I have to protect what I can. And that’s what bankruptcy courts used to be for. The court would set aside a man’s debts and give him another chance.
As to securitization and community banks and thirty year mortgages, some people haven’t been around long enough to know that before securitiztion the only loan you could get was a fixed rate thirty year loan that would most likely be made by your community savings bank where you did your banking and that until the 1970s the fixed rate of interest would be around 5%. All securitization did was to flood the market with so much money that everyone started offering _different_ mortgages to feed the machine. And look where that got us. Yes, a distortion of resources always ends badly.
Yeah- I like him too!
Benson, thank you for your encouragement and kind thoughts, much appreciated.
HA! bkrules… I think I like you.
I love how everyone would make fun of a person with a cellphone contract who, faced with financial difficulties, didn’t break their cellphone contract and pay the agreed-upon penalty for breaking that contract.
But with a house, consumers are supposed to take a massive loss when they don’t have to.
Reminds me of how everybody got up in arms about the dangerous precedent when it came to violating the contracts of Wall Street guys in return for a bailout, but it was a vital necessity for the survival of humanity for us all to violate the terms of rank and file auto workers when their companies got a bailout.
I guess some contracts are just more sacred than others. Funny how when the little guy ends up screwed, it’s OK for a contract to be broken, but when it’s the money guys? No, no, rationally breaking a contract and suffering the agreed-upon penalty would somehow be the end of capitalism as opposed to capitalism in action.