Is "walking away" from a mortgage wrong? | TigerDroppings.com

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WikiTiger
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Member since Sep 2007
40721 posts

Is "walking away" from a mortgage wrong?


AngryBeavers said it was in the "mortgage help for daughter" thread.

I don't think it's wrong at all. What says the Money Board?







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Cold Pizza
Ohio State Fan
Member since Sep 2011
7639 posts

re: Is "walking away" from a mortgage wrong?


Yes. It's breach of contract.





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Swifty
LSU Fan
Member since May 2012
947 posts

re: Is "walking away" from a mortgage wrong?


Yep, its wrong.

Get back to your sex thread wiki



This post was edited on 10/11 at 8:43 am


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ZereauxSum
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re: Is "walking away" from a mortgage wrong?


Nicely done spinoff

I will say this until the day I die. There is nothing "wrong" with walking away from a mortgage. There is no moral component here at all.

A mortgage doesn't say, "pay or you're a bad person". It says "pay or we'll take your collateral".

Whether a person sells the house for less than they owe, or transfers ownership through a foreclosure or dees in lieu, it's the same effect. Borrower defaults, and a portion of the balance is written off. This is what happens in bankruptcy and no one is saying bankruptcy is "wrong".






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Cold Pizza
Ohio State Fan
Member since Sep 2011
7639 posts

re: Is "walking away" from a mortgage wrong?


I grew up in a farming community. There are farmers who filed bankruptcy in the early 80's who are still pariahs. And rightly so.





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AngryBeavers
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Member since Jun 2012
3383 posts

re: Is "walking away" from a mortgage wrong?


As I said in the other thread I understand the reasons people walk away and would be tempted myself were I in that situation. I would also have a very hard time living with myself and sleeping at night knowing I walked away from an obligation. The only way I would walk away was if I could not afford the note I signed anymore.





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LSUAfro
LSU Fan
Baton Rouge
Member since Aug 2005
10244 posts

re: Is "walking away" from a mortgage wrong?


Morally? Yes
Financially? No

I am yet to work or do business for a company that uses morality as a basis for the majority of their decision making.

Why should a consumer reciprocate if the other side shows no moral obligation to them?







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Swifty
LSU Fan
Member since May 2012
947 posts

re: Is "walking away" from a mortgage wrong?


quote:

Why should a consumer reciprocate if the other side shows no moral obligation to them?



And what moral obligation would that be?






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Cold Pizza
Ohio State Fan
Member since Sep 2011
7639 posts

re: Is "walking away" from a mortgage wrong?


quote:

Why should a consumer reciprocate if the other side shows no moral obligation to them?


It's good business. If you develop the reputation of being the most honest business to work with, customers will be calling YOU.






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ZereauxSum
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re: Is "walking away" from a mortgage wrong?


quote:

There are farmers who filed bankruptcy in the early 80's who are still pariahs. And rightly so.


Why should they still be pariahs?

If they moved to another town, no one would even know about the bankruptcies. They don't even show on their credit anymore.






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TheHiddenFlask
Clemson Fan
The Welsh red light district
Member since Jul 2008
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re: Is "walking away" from a mortgage wrong?


No. Not at all.

It's a business transaction and it is the responsibility of the bank to underwrite appropriately for the risks. Bankruptcy is basically a put option on the loan and that information is known up front by the bank.

FYI, I'm an underwriter (not retail).






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LSUAfro
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Baton Rouge
Member since Aug 2005
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re: Is "walking away" from a mortgage wrong?


quote:

And what moral obligation would that be?

Seriously? In this mortgage environment? Ponder the other side of the coin and I'm sure you could figure out a few examples.






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TheHiddenFlask
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re: Is "walking away" from a mortgage wrong?


When the bank lends me money at LIBOR, I will start feeling a moral obligation to repay.

Banks are just credit arbitrage machines. If you don't default, you are actually getting screwed, as you have subsidized the defaults of others.






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Swifty
LSU Fan
Member since May 2012
947 posts

re: Is "walking away" from a mortgage wrong?


quote:

Seriously? In this mortgage environment? Ponder the other side of the coin and I'm sure you could figure out a few examples.



A mortgage is a loan, not some magical entitlement bestowed upon the masses by Jesus. Its an agreement to pay later what you could not pay now. The lender has a moral obligation to its stake holders, not to the borrower.

In most cases, people will live 6-12 months in a property pending forclosure withouth making a single payment. I'll suppose you would be of the opinion that the lender owed them that time... Grow up.






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LSURussian
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re: Is "walking away" from a mortgage wrong?


quote:

It says "pay or we'll take your collateral".

And in full recourse states, after it says the above it also says, "And if the collateral is sold for less than the loan value, we will then pursue all legal means to collect the difference from you."

The vast majority of U.S. states are full recourse states, btw.

I don't consider walking away from a loan as a "moral" thing. "Moral" connotes a religious based concept. I don't think it is religious.

But to me, it is a business ethics issue.







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LSU1018
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Member since Feb 2007
5115 posts

re: Is "walking away" from a mortgage wrong?


I don't think it's wrong at all to walk away as long as you don't mind dealing with the consequences. I'm not sure what the default rate is right now but let's say 85% pay their mortgage and don't get foreclosed on. For all those, if they didnt put 20% down they are paying a large amount in mortgage insurance. Then to get PMI removed is not easy to do. I definitely don't feel sorry for banks.





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LSUAfro
LSU Fan
Baton Rouge
Member since Aug 2005
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re: Is "walking away" from a mortgage wrong?


quote:

A mortgage is a loan, not some magical entitlement bestowed upon the masses by Jesus.
Profound
quote:

Its an agreement to pay later what you could not pay now
Enlightening
quote:

In most cases, people will live 6-12 months in a property pending forclosure withouth making a single payment. I'll suppose you would be of the opinion that the lender owed them that time
You think the debt holder is doing this out of courtesy?
quote:

Grow up

Again Big picture...you don't see it.






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yellowfin
Illinois Fan
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Member since May 2006
67655 posts

re: Is "walking away" from a mortgage wrong?


I can see both sides to this but in certain situations (like that other thread) I think the blame would mostly fall on the contractor. If you're walking away simply because you're upside down then that's a problem.





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Swifty
LSU Fan
Member since May 2012
947 posts

re: Is "walking away" from a mortgage wrong?


quote:

LSUAfro





Alright, I yeild. I agree that we need to get people back into the economy any way we can right now. But I'm fearful of the moral hazard walking away creates.






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SlowFlowPro
Stanford Fan
Simple Solutions to Complex Probs
Member since Jan 2004
292826 posts

re: Is "walking away" from a mortgage wrong?


morally? no

it's a contract. there are mechanisms in place in the result of a breach. morality plays no part in that mutually-bargained exchang






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