I have to jump back in this. I obviously got a little heated there . . . but don't worry, I'm back down to earth. I'll try to keep this short. In my experiences with banks, when it comes to making decisions, they will do what is in their best financial interest. I'm not saying that it is wrong. I understand the importance of banks and their need in society. I understand they are here to make money. The bankers I have met and associated with are nice down to earth people (I believe some actually feel bad when they tell me I messed up and they need the balance of the loan by the end of the month ). But really I got nothing against bankers and am embarrassed at the way I lashed out at their profession. It's an honorable profession. But with banks, it is all business. Go in aware of what you are getting yourself into. That doesn't mean it can't be a friendly ammicable relationship, it usually is. But if in the end, it is in my best financial interest to get out of a mortgage . . . I won't be crying for the bank.
Clearly we're going to have to agree to disagree, but I will just say that a bank acting in its best financial interest will assiduously adhere to a code of ethics and standards. As I said before, it's not only good for the soul, it's good business. If given the choice between a bank that you know have tried to screw other borrowers and those that have acted in the best of faith, all other things being equal, you're going to choose the latter every time. Those that are interested in the long run will always act as ethically as possible.
Not to mention that banks are regulated, which serves to increase consumer confidence in their services and standards of behavior and ethics.
Among other things, it becomes impossible to get a home equity loan. Traditionally, homeowners have borrowed against the value of their house--including taking out their built-up equity--for renovations and repairs, and to pay for life events like school and marriage. The existence and availability of home equity loans have been one of the drivers of the economy, partly because homeowners can effectively convert non-tax deductable loans into tax-deductable loans, freeing up money for other purposes. To give a simple example, when I bought my first house, it was appraised for more than we paid for it, so my wife immediately took out a home equity loan for the difference, and used it to pay off some student loans. As a result, we were able to both lower the interest rate on that debt, and it was now tax deductable because it was backed by the value of the house. Also, the fact that it is now impossible to sell your house has a bigger impact than you imagine. You have the retiree who wants to downsize and save the costs of utilities, property taxes and upkeep, but can't. You also have the worker who wants to move to another city or state to take a better job but can't. Not only do they have to bring money to the table to sell their house, but often homes will sit on the market for months and months before selling without essentially giving it away. This, in turn, constrains the economy from growing, because available jobs go unfulfilled, and qualified workers can't take them, because the cost of moving is too high. In three years I will almost certainly sell my house and move. I am much more concerned about it sitting on the market for a year than I am about selling it for a $50,000 or $100,000 loss. One issue that is rarely addressed is that homeowners tend to think that it is their "right" to make a profit on their house, and see it as an investment. A house is not an investment. It is a home. You just hope that it retains its value. It is a fairly straightforward analysis to determine the break-even point between renting and buying. You look at your expected expenses, including upkeep and taxes, and the deductability of mortgage interest, the transaction cost (closing costs, broker fees) of buying and selling a home, etc. There are a lot of variables, but generally speaking the break-even point is four-and-a-half to five years. That is, if you live in a house for five years or longer, and can sell it for the very same amount that you paid for it, you will be better off than if you had rented a comparably-sized apartment over the same period. If you do the spreadsheet properly, you can conduct an intricate sensitivity analysis, and see how the break-even point would shift based on different assumptions. I would be thrilled to sell my current house for what I paid for it (plus capital improvements) when I sell it five years after I purchased it.
I don't see anything here that really rebuts my point: people don't pay mortgage payments out of morality. You might, but most people don't. People pay because they are legally and financially obliged to, and it's the easiest course of action. If moral obligation of the individual when applied to massive bureaucracy actually worked as a driving motivator, the Soviet Union would still exist. The proletariat were morally obliged to produce the most they could for their collective. Didn't work out so hot, though. I was mocking you for sounding so sanctimonious. I still think you sound sanctimonious. Sorry. But that's how it sounds when you try to compare a mortgage contract with a bank that doesn't exist anymore with the personal relationships I have with my customers or my children. *shrug* I just don't think we'll see eye to eye on this. I feel strong moral obligations to the people I know. Those feelings diminish the more distant they are from me. That's why I may feel bad for, say, a woman in the Middle East who has acid thrown on her face, but I don't feel much moral obligation to help her. I don't think it's because I'm an immoral person. It's just human nature.
So you would agree Paul Allen is an amoral parasite for declaring bankruptcy to avoid paying Portland business people millions that he owed to them for Blazers business? He quite obviously had other options.
And I don't see anything in your post that tells me you're a moral person. There's right and wrong. Call it sanctimony if you wish. My point was that when you give your word, you do your absolute best to fulfill it. You may find the shades of gray all you wish, but if you default on a mortgage because it's the easiest thing to do, well then that speaks volumes about your character.
As someone that used to be involved in the RQ loan (albeit tangentially), I think he and his people were completely dishonest and immoral in that scenario. Pru was more than willing to lower the interest rate (along with Teachers and Farmer's), but they wanted something for something. PA wanted to give something for nothing. If they lowered the interest rate, they wanted a personal guarantee. PA and the people that advised him were idiots. In the end, the consortium came out whole and PA lost tens of millions of dollars for absolutely no reason. I call that justice.
If you want to judge people's charcater on whether they would walk away from a mortgage, that is your right. But if that speaks volume about someone's character, what does the fact that a wife thinks their husband is an asshole say about someone's character?
If one person just stops working, then I don't feel particularly good about it. They likely never respected the institution of marriage in the first place. You can extrapolate all you wish, but my point is simple: if you sign your name to a contract that gives you an upfront benefit, you have an obligation for repayment. I have nothing against those who try to workout their loans or those who exhaust every other option. I have a real problem with those who say, "Meh, I could continue to pay, but it's not advantageous for me, so I'll just give the keys back."
It says that she knows me well. I'm an asshole; I admit it. You should admit you lack character. Knowing oneself is important. When the going gets inconvenient, you go back on your word. It's okay to admit the truth.
I don't know man . . . I think your putting weird justification twist on this. Just because you recognize you are an asshole shouldn't really justify it. I guess you could be an asshole and admit it to justify it. . . or you could try not being an asshole.
