Wrong.
The banks did their due diligence and made the loan to people who could afford the payments in these cases. These are not “sub prime” loans.
These people are simply walking away because THEY made a gamble that didn’t work out in their favor and are unwilling to bear the burden of THEIR choices.
It is immoral.
EXACTLY.
No, you’re wrong. This isn’t about subprime and never was and neither did I say so. This is about banks making loans for properties that were never worth the price being paid. This places the loan at risk as property values decline and makes that collateral worth less than the loan amount. That is the banks responsibility every bit as much as the buyer’s.
You know what was immoral? For the government to create a real estate bubble and completely destroy our financial system for a few years of a phony boom. It was immoral for them to tell everyone that it was sustainable. It was immoral for the slime on CNBC to tout it every step of the way.
In the scheme of things, this guy taking advantage of his contractual rights seems quite a bit of a lesser evil.
You hypocrites can have a field day with this one...from the left-wing Wall Street Journal...
What’s good for the Goose is good for the Gander.
Divide and Conquer!
By Emily Peck
So we’ve discussed the ethics of individual borrowers walking away from their mortgages. (Some say we’ve over-discussed it.) If it’s immoral, as some would say, for a borrower to walk away their mortgage, is it any different for a bank?
Morgan Stanley is doing just that. News reports on Thursday said the bank plans to give back five San Francisco office buildings to its lender–just two years after buying them at the top of the market.
“This isn’t a default or foreclosure situation,” spokeswoman Alyson Barnes told Bloomberg News. “We are going to give them the properties to get out of the loan obligation.”
Sound familiar?
I’ve said this before, I’ll say it again:
When banks and bankers are in this situation, they default. Businesses and banks look at these situations, when *they* are in them, with no morality or reputation issues taken into consideration. They’ll default on a loan and hand back the property when it is in their best interest.
So why should the typical homeowner do any differently? The bankers are used to being able to convince people that paying back their mortgage is a ‘moral’ issue, when it isn’t. There’s no morality in business tort law. There was a contract signed, and as long as the borrowers abide and comply with the terms of the contract, they’re within the law.
I give you this example:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aLYZhnfoXOSk&pos=5