[The Ghost of FReepers Past]

I don’t commend anyone for refusing to honor their financial commitment.

Real Estate is an investment with risk. Loaning money should have nothing to do with that. It is just loaning money. What if you borrowed money and bough stock with it? Or anything else that could depreciate?

Shame on them for blaming others for their own misfortune. It is sad when the market goes down but a borrower is still the owner. They shopped for the house. They picked the house. They agreed to the price. They asked a bank to give them a loan and signed a contract agreeing to pay.

[cuban leaf]

I don’t commend anyone for refusing to honor their financial commitment.

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But they do. This is why banks used to require 20% down. Most real estate loan contracts, paraphrased, usually say, “I, the buyer, agree to pay the lender so much a month for so many years until the lender is paid in full or give the house to the lender.

Giving the house to the lender is a sort of “option”. By requiring 20% down, the lenders usually prevent that from happening.

People who walk away are basically exercising the option or, “plan b”. It’s the banks own fault for incentivizing someone to exercise it.

[stremba]

I agree totally. People should honor their financial commitments. I know it’s unpopular to say this (with some), but the banks did not screw anyone. Terms of mortgages were mutually agreed upon and were put into the contract when the money was borrowed. The fact that external circumstances changed the borrowers’ ability to repay is not the fault of the banks. Borrowers should have been more careful about signing anything other than a fixed rate mortgage to buy their house. The lure of being able to buy a house that is more expensive than you can really afford, though, seems to have led many astray.