Comments on: Is It Wrong To Walk Away From an Underwater Mortgage?

By: George Crowe

George Crowe — Mon, 12 Jul 2010 21:48:00 +0000

Bill and Ginger, I’m with you in an abstract moral sense, but things are rarely black and white in real life. I think it’s one thing to argue the ethics of something like strategic default in general, and probably often very different and more complex in many cases for people who actually have to make the hard decisions in doing what’s best for their families.

Of course in the case, as Bill writes in his blog, of “a member of the privileged class who has a loan that they don’t want to pay because the thing they bought went down in value”, I agree in that scenario it’s hard to defend.

Good discussion.

George

By: Bill Lublin

Bill Lublin — Sun, 11 Jul 2010 20:52:10 +0000

Sorry it took so long. If you wish, you can see my opinion on this at http://rereflections.com/2010/07/11/is-your-moral-compass-broken/

By: Is Your Moral Compass Broken? | REreflections.com

Is Your Moral Compass Broken? | REreflections.com — Sun, 11 Jul 2010 20:44:45 +0000

[...] Ginger asked me to read the latest post on her awesome “Blog by the Bay“. The title was “Is It wrong to Walk Away from an Underwater Mortgage”, written by George Crowe. The topic of the post was strategic default. The topic is interesting [...]

By: Ginger Wilcox

Ginger Wilcox — Sun, 11 Jul 2010 20:28:07 +0000

There are some people who are getting foreclosed on because of life circumstances beyond their control, a lost job, a sick family member etc. That is an altogether different circumstance than a strategic default.

What George is referencing here with strategic defaults are not people who can’t pay afford to pay their mortgage payments every month but people who can pay it and choose not to pay because it will benefit them financially.

Perhaps I am altruistic but I have always believed that if you take on a debt, you pay it back. I sold my house this year at a price that I would never have expected to sell it for. It stinks, but that is how life goes. Some investments are good, some are bad. Foreclosures can have a dramatic, long term negative impact on communities. As human beings, I believe we have some commitment to our community, which is why we abide by laws, volunteer, give to our schools, etc.

For me personally, I would have a very hard time walking away from a commitment that I understood the ramifications of before I took it on.

By: Bill Lublin

Bill Lublin — Sun, 11 Jul 2010 18:45:08 +0000

The situation you discuss is not without it’s challenges, but when you sign a mortgage and note (which are the loan documents used in my commonwealth) , the mortgage is the pledge of the property for repayment of the debt, and the note is your personal promise to repay the debt.
Though I cannot understand the stress experienced by the defaulting borrower, the actions of the lender don’t relieve them of the moral obligation to repay their debt.
In fact as I write, I’m starting to feel strongly enough about it to write my own post . If I do I will stop back and provide you with a link.

By: kim

kim — Sun, 11 Jul 2010 17:26:31 +0000

I love how you say that the higher income tax bracket sees it as a wise business decision. Of course no one wants it on their record but I see so many “uninformed” people who are too stubborn to even consider walking away from their home while the mortgage is causing incredible stress leading to health, family and marriage problems. I wish more people would consider this as an option. I’d love to see less physical and emotional stress & more saved marriages. Is it more ethical to stick to your commitment to a bank than to commit to your own well being?