Posted on 05/17/2010 8:28:47 PM PDT by kddid
Choosing not to pay has consequences beyond damaged credit scores.
CHICAGO (MarketWatch) -- "Strategic defaults" are on the rise as more borrowers who are underwater on their home loans decide it's not worth it to stay current on their payments each month. That trend could have repercussions for the housing market, and for borrowers, in the future.
Strategic defaults are when borrowers who owe more on their homes than they're currently worth choose to stop paying their mortgage but continue to meet other financial obligations, according to a definition by Morgan Stanley in a research report on the topic.
In other words, these homeowners neglect their monthly principal and interest payments, but still pay other bills on time, including credit cards and auto loans.
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Growing social acceptance of this behavior could have ramifications not only for personal credit histories and the health of neighborhoods, but also for the future of mortgage lending, according to those studying the issue.
(Excerpt) Read more at marketwatch.com ...
Well, it is the age of Obama. In this age, there seems to be no reason to feel ashamed of intentionally breaking your contract and your word.
Personally, I despise debt. I would break myself to avoid paying interest. After all, I could always borrow if I got in a tight spot.
I am curious about other peoples opinion on this subject.
What would you do if you had enough cash to pay off your home while leaving you with just a few thousand dollars? Would you do it?
Yep, its “social justice”, which according to Zero, includes not having to pay your debts. Its the age of “if it feels good, do it” finance.
Yes we would. In a heartbeat.
Thats Ok. Obama wants them to lose their homes. Then he’ll ship them off to dorms for real community-style living.
This is a recovery?
If the loan carried a 5% rate - and and an investment could make 10% - I'd invest. If double digit inflation was down the road, it'd be best to wait and pay of the loan with worthless money... If not much was owed - say 10K to 20K on a $300,000 loan - paying it off would be like buying an annuity for almost nothing.
I paid off my house for the security of it...now no matter what happens I will always have a place to live unless the County raises the property taxes exhorbitantly. It was worth it to me to have that peace of mind.
If the damned banks were being competently run they would never have lent the sums in question for many of these houses. There is an implied culpability on their part.
There’s a group of people here on FR that think it is just fine to walk away from your mortgage even if you can afford the payments if you owe more than house is currently worth. They think it is simply an economic choice and nothing more.
I said it was immoral and took a lot grief for it.
I still think it is immoral. You agreed to do something and it is within your power to honor it but to save a buck you’ll burn your word.
No thanks.
“Growing social acceptance” is the key. There is no shame to being a lazy deadbeat anymore. These aren’t people who have been paying for years and hit a little bad luck. They are people who bought way more than they could afford and then handed over the keys rather than pay for it. And the mortgage companies were incredibly stupid for making the loans too—they deserve what they are getting.
The defaults are yet another sign that the American character is in decline and that our society is swirling down the toilet into decline. Be afraid for your kids and the America they will live in after we are gone.
Lenders are now supposed to give psych exams to try and determine if the borrower will honor his word beyond the ability to pay?
Keep this crap up and lenders won't lend to anyone.
I think it is immoral - and also, I think it is shortsighted. It is quite possible that a wave of inflation - even hyperinflation - is on its way. Is so, then people who keep a loan and a material asset will be much better off.
Of course, then those who walked away from their mortgages, will be screeching that they cannot get into the market, and its not fair.
As long as the borrower complies with the terms of the contract, there is no moral question involved.
If the terms of the contract permit the borrower to return the property to the lender and walk away, where is the immorality. If that is the case, it is nothing more than a business/financial decision.
If a person walked away today and saved up a 20% down payment for a purchase in two years, lenders will line up to give them a loan. You think lenders don’t realize that the current real estate market is an exceptional situation?
In what states have you 1 or 2 years after stopping payments, before you are evicted? In Texas, it is about 90 DAYS!
bookmark
We’ll see.
Someone’s word use to mean something through thick and thin.
Now if conditions change and there’s an advantage to walk away people simply walk no matter what the consequences are to others.
Sign a contract, PAY IT NO MATTER WHAT YOU HAVE TO DO!
I’ve lived by the rule I was taught by my parents.
Other than your 1st home mortgage, if you haven’t got the cash, you don’t need it.
I’ve lived by that rule for 72 years.
If I buy a car on credit, it loses value immediately when I drive it off of the lot. But I still pay for that car. The lender gets annoyed and will come and get the car if I don't live up to the contract.
The same thing happens with a house. The value can fluctuate. My name is still on the contract to pay the lender.
It is not a business/financial decision.
It has to do with my commitment to a legal document, and commitment, that I signed. It has to do with my integrity.
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