Posted on 06/04/2011 3:20:27 PM PDT by Chunga85
Is it ethical for the American homeowner whose mortgage has been securitized to default, even If they are not financially distressed?
First, consider it is unlikely that marketable, fee simple, insurable title can be obtained as a result of fulfilling the obligations of the related promissory note. On the contrary the titles to some 60 million homes in America are badly clouded. Secondly, encouraging investment in an asset class that has been artificially inflated, then deliberately destroying the price of the asset, as part of a separate profit making scheme is unethical, and any agreement based on this type of fraud is grounds to consider the original debt instrument used in the agreement null and void. Fortunately these grounds are unnecessary, as increasingly US courts are ruling that these mortgages are already invalid for numerous other reasons.
On November 12th, 2010 we published our article “Tattoos, Pyramid Schemes and Social Justice” in which we advocated that homeowners consider suspending their mortgage payments. In the article we enumerated reasons why we felt this action is both ethical and prudent. On January 11th, 2011 we published our articles “Ibanez– Denying the Antecedent, Suppressing the Evidence and one big fat Red Herring” which outlined the legal realities of securitized mortgages, and the impact of the landmark Ibanez decision on homeowners, particularly in Massachusetts. We affirmed our conviction that Massachusetts homeowners with securitized mortgages might want to consider suspending their mortgage payment, and place instead their funds into an escrow account.
(Excerpt) Read more at amvona.com ...
So, to winnow all this BS down to basics, are you suggesting it is OK to be a thief if you’re an educated one, eh?
JC
“It never ceases to amaze me what the sinners will use to justify their sins. “It’s okay if I default because the banks are greedy.” Whatever helps you sleep at night, sinner.”
Right, bring sin into this, when the banksters could not be in clearer violation of Biblical precept. Check out Deuteronomy 23:19-20. And when’s that year of Jubilee coming? Just so us sinners know, k?
Now this turns into religon. You do not know me. Only one shall judge and that is not you. We are all sinners, no? You’re part of the problem.
By the way, I have two mortgages and deliquent on neither. I pay my bills.
LOL. Harvard PHD economics 94. Does that make you feel any better?
The underwriters knew what the mortgage broker and appraiser were doing. Didn’t matter, quota’s and bonuses took priority.
You tell me...
No one should get a free home. No one.
No, philosopherdeadbeat - if YOU accept the conditions and use the product it's YOUR job to pay.
You're evidently a prime example why these days MBA generally stands for nothing other than More Bullshyte Ahead, deadbeat.
Uhuh. And FDIC also picks up the tab on the loss for certain institutions.
"But who lost? That would be the taxpayers who lost. The taxpayers lost the discounted value of the loan in sale to One West Bank. That was about $169,500 less than the loan value. And, the FDIC also covered 95% of the lost from the original value of the note. The loss was $131,000 plus foreclosure costs for a total loss of about $141,000. That makes the total loss to the taxpayers was about $300,000."
Ain't that cute?
It isn't about party affiliation or political persuasions nor is about one's perception as to their level of education.
It is about the law. More accurately, it's about the fact that we seem to have two sets of laws...one for government and "Too Big To Fail" financial institutions and another for everyone else.
To wit: AZ Rep. Seel [R] receives a rather gratuitous fifty-one percent principal reduction two days before the scheduled vote on Senate Bill 1259
I'm not going to post the entire bill but below is a summary.
"Provides a chain of ownership during foreclosure proceedings and allows reimbursement of lawyer fees for injunctions or court cases that fail to prove ownership."
After receiving his highly unusual principal reduction the good Senator failed to appear for the vote.
It's about the law.
Many of the same arguments laid out in the comments in this thread are brought up by counsel for MERS, Domestic Savings Bank, Credit Northeast, Countrywide Home Loan Servicing, Bank of America, N.A., and the Federal National Mortgage Association in the case below. The court was not pursuaded.
Robert E. Moll vs. MERS, et al
The brief provides an abundant amount of case law for those interested.
Back to the issue of two sets of laws and why we have them...this four minute video sums it up quite nicely.
"It is no measure of mental health to be well adjusted to a profoundly sick society"
We allow it to happen.
...all these are the beginning of sorrows. matthew 24: 8
I hope all of you folks have a nice day.
If something is wrong, it’s wrong. If you are able to keep paying your mortgage but refuse to because you are ‘underwater’, that is wrong. Nothing the banks did makes it okay. You signed the note, you agreed to the terms, you keep your word. Oh, and BTW, you are not just hurting the banks with your actions, you and others like you are really deeply hurting other totally innocent neighbors and homeowners by pulling all prices down and leaving vacant houses.
Buy a house you like at a price and mortgage you can afford. If it is worth less for a time, so what. I have cars and stocks that are worth less than I paid.
Banks have insurance to protect them from what you do, so it is only the homeowning neighbors that you will be stabbing in the back. And, it is the selfish people like you across the country that is making the housing market and the economy fail nationwide. So, you are helping to kick America while She is down.
Owning RE involves simple contract law. Both sides have to honor a signed contract. If the contract is not followed then it can become a court matter. Let the Courts figure it out as it makes no sense to make payments towards a fictitious lien.
I think strategic default is wrong, period. I wouldn’t do it under any circumstances and consider it little different from theft.
However, there are circumstances where people lose a job, get sick, etc. and can’t pay back a loan. In those circumstances, I don’t have a problem with the person defaulting. And I also don’t have a problem with them doing so in such a way that preserves as much of their assets as possible.
Said another way, I don’t believe that individuals should be held to a different legal standard in default than a corporation would be held to in a bankruptcy.
What it really boils down to is this simple question: “Should the banks have to obey the same laws that the rest of us do?”
Given your screen name, I can tell that you tear up over some stupid guy who commits suicide because he can’t sell enough shoes.
If you think that all business people (which you obviously don’t given your last post)are morally and ethically honest then yes, all debts should be repaid. If, on the other hand, you believe that businesses which are run by (how did you put it? oh yeah...) More Bullshyte Ahead deadbeats then no.
Check the thread (do a search on FR I don’t have time for it) on the “foreclosure of Bank of America” which wrongly foreclosed on a Florida couple’s home and refused to pay the court ordered costs. Count the positive vs negative comments.
If you believe that we should blindly do whatever banks tells us to then you are either a bill collector or a moron.
Yeah or when the super wealthy fat corps and or Wall Street needs to be bailed out, that's all A-OKAY. Pay up.
There's no question in my mind that a person has a moral obligation to pay off a just debt if he/she is capable of doing so, regardless of what the law says. But this whole system of paying a mortgage starts to get very blurry when the mrotgage instrument is transferred from the original lender to secondary investors . . . and there are serious questions about just who holds the title to the property. This is the underlying legal issue that is faced by many courts involved in foreclosure proceedings, and in some states there are far too many cases where the party foreclosing on a home isn't the party that actually holds the title to the property. For some reason Florida is rife with this kind of nonsense, which makes me wonder what's going on down there and what unique legal issues are involved.
Is it ethical for the American homeowner whose mortgage has been securitized to default, even If they are not financially distressed?
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They should continue to pay while pursuing a Quiet Title action , if they win the QT they should then sue for the return of all monies paid in.
“If something is wrong, it’s wrong. If you are able to keep paying your mortgage but refuse to because you are ‘underwater’, that is wrong. Nothing the banks did makes it okay. You signed the note, you agreed to the terms, you keep your word. Oh, and BTW, you are not just hurting the banks with your actions, you and others like you are really deeply hurting other totally innocent neighbors and homeowners by pulling all prices down and leaving vacant houses.”
Is it okay for the banks to claim TARP funds even though that is redistributionism, because the banks have a duty to their stockholders to maximize earnings? If that is the case, banks are immoral. There should not then be imposed some ‘moral’ duty on homeowners, when the same rules don’t apply to the formerly community-oriented institutions granting them mortgages, which are slaughtering businesses and potential home sales countrywide by sitting on those TARP funds (which were, after all, intended to LOOSEN credit). If your intimation is that contracts with immoral actors do not justify one-sided retaliatory breach by a party simply because that party ‘got what it asked for,’ I reckon you should stake a law practice for pimps who want to shake down deadbeat johns via the court system and every bookie who needs to collect by sending the sheriff out to do their dirty work.
And I don’t see how how “hurting other homeowners” comes into the equation at all. If those other homeowners benefited from the rise in value that attended this housing boom, they should taste the drop, too. Many of those homeowners did not suffer the property valuation hike, sold or refinanced when the getting was good, and benefited from the bubble. It wasn’t immoral for them to do that based on an inflated, false value of housing when current homeowners can’t—it isn’t immoral for other homeowners to determine that their legal right to abandon a house and suffer the credit slap is somehow superior to their right to keep a mortgage debt in good standing. Essentially, you’re making the same argument, that previous immoral actions by other immoral actors don’t justify one’s subsequent immoral acts. But the situation isn’t always as clear cut as you would have it, as I’ve noted above.
Further, if you believe cutting and running on an underwater house is immoral because it will damage the neighborhood, then it’s similarly immoral not to paint your house or mow your lawn, and I’m pretty sure God doesn’t hold it against people if they fail to trim the weeds occasionally. My HOA might appropriately address a homeowner with terrible crabgrass, but it doesn’t somehow make that homeowner a sinner. Of course, I don’t attend your church, either.
Back when I was a kid, and even when I bought my first house in the '80s, making a mortgage was all about the borrower. Did the borrower have the income and sound financial history to make the loan a good investment for the bank?
Sometime about 10-12 years ago, the mortgage became less and less about the borrower and more about the house. The rise in the value of the collateral (after all, "Housing Always Goes Up") would ensure the viability of the loan regardless of borrower conduct. Hence the half-million dollar loans to strawberry pickers.
This went hand in hand with the change in the mortgage industry's business model. Where mortgage companies historically relied upon the income streams from held mortgages, by the early 2000's this had largely been replaced by one-time origination and processing fees, which were followed immediately by flogging the note off to some successor purchaser.
One did not have to be a financial genius to see this was the road to disaster. I sold my house in 2006 for $450,000, you could probably buy it for half that amount today. And believe me, I'm no genius. I'm just smart enough not to drink the asset bubble Kool-Aid.
So as far as I am concerned, the people who currently hold all these mortgage backed securities were dumber than me.
And if they can't prove they have clear title to the homes, then they should lose their ability to foreclose. Not because they are evil, but because they are incompetent.
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