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Started By
Message
Is "walking away" from a mortgage wrong?
Posted on 10/11/12 at 8:33 am
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?
I don't think it's wrong at all. What says the Money Board?
Posted on 10/11/12 at 8:41 am to WikiTiger
Yes. It's breach of contract.
Posted on 10/11/12 at 8:41 am to WikiTiger
Yep, its wrong.
Get back to your sex thread wiki
Get back to your sex thread wiki
This post was edited on 10/11/12 at 8:43 am
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".
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".
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.
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.
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?
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?
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?
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.
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.
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).
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).
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.
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.
Banks are just credit arbitrage machines. If you don't default, you are actually getting screwed, as you have subsidized the defaults of others.
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.
Posted on 10/11/12 at 10:19 am to ZereauxSum
quote: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."
It says "pay or we'll take your collateral".
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.
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.
Posted on 10/11/12 at 10:31 am to Swifty
quote:Profound
A mortgage is a loan, not some magical entitlement bestowed upon the masses by Jesus.
quote:Enlightening
Its an agreement to pay later what you could not pay now
quote:You think the debt holder is doing this out of courtesy?
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
quote:
Grow up
Again Big picture...you don't see it.
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.
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.
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
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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