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WikiTiger 
LSU Fan
Member since Sep 2007
38216 posts
| Is "walking away" from a mortgage wrong? (Posted on 10/11/12 at 8:33 am)
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? (Posted on 10/11/12 at 8:41 am to WikiTiger)
Yes. It's breach of contract.
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Swifty
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Member since May 2012
905 posts
| re: Is "walking away" from a mortgage wrong? (Posted on 10/11/12 at 8:41 am to WikiTiger)
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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Atlanta, GA
Member since Nov 2008
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| re: Is "walking away" from a mortgage wrong? (Posted on 10/11/12 at 8:44 am to WikiTiger)
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
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| re: Is "walking away" from a mortgage wrong? (Posted on 10/11/12 at 8:44 am to Swifty)
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
1539 posts
| re: Is "walking away" from a mortgage wrong? (Posted on 10/11/12 at 8:47 am to WikiTiger)
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
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| re: Is "walking away" from a mortgage wrong? (Posted on 10/11/12 at 8:48 am to WikiTiger)
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
905 posts
| re: Is "walking away" from a mortgage wrong? (Posted on 10/11/12 at 8:51 am to LSUAfro)
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? (Posted on 10/11/12 at 8:51 am to LSUAfro)
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
LSU Fan
Atlanta, GA
Member since Nov 2008
5706 posts
| re: Is "walking away" from a mortgage wrong? (Posted on 10/11/12 at 8:52 am to Cold Pizza)
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? (Posted on 10/11/12 at 8:59 am to ZereauxSum)
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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| re: Is "walking away" from a mortgage wrong? (Posted on 10/11/12 at 9:01 am to Swifty)
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
Clemson Fan
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| re: Is "walking away" from a mortgage wrong? (Posted on 10/11/12 at 9:06 am to LSUAfro)
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
905 posts
| re: Is "walking away" from a mortgage wrong? (Posted on 10/11/12 at 10:03 am to LSUAfro)
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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63142 posts
| re: Is "walking away" from a mortgage wrong? (Posted on 10/11/12 at 10:19 am to ZereauxSum)
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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Baton Rouge
Member since Feb 2007
4824 posts
| re: Is "walking away" from a mortgage wrong? (Posted on 10/11/12 at 10:19 am to Swifty)
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
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| re: Is "walking away" from a mortgage wrong? (Posted on 10/11/12 at 10:31 am to Swifty)
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
Paige is Pretty
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| re: Is "walking away" from a mortgage wrong? (Posted on 10/11/12 at 10:40 am to WikiTiger)
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
905 posts
| re: Is "walking away" from a mortgage wrong? (Posted on 10/11/12 at 11:12 am to LSUAfro)
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
Equality is a circle, not a =
Member since Jan 2004
263308 posts
| re: Is "walking away" from a mortgage wrong? (Posted on 10/11/12 at 11:22 am to WikiTiger)
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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