A friend of mine bought a home in a town were the economy has almost completely collapsed. He became unemployed so he had to move to another part of the US.
He couldn't sell his house, so now he is rening it at half the monthly payment price.

"None of this, of course, deals with the larger ethical question:"

Ethical my ass!

The bankers caused this mess with fractional lending, in a debt based system were the little guy always gets screwed.

Iceland just told the globalist bankers to fuck off.
So should the USA.

I don't think it was all the banks fault, as it take two to tango, and it takes two to have a contract.

I think both groups thought that they were pitching in this situation if you get my drift. They were both wrong as it has caused fiasco on both ends (pun intended) of the situation.

People who enter the contract are legally obliged to finish or buy out the contract in order to cancel it if the lender does not agree to the cancellation.

People knew this in advance, and yet they signed up anyway Sometimes you take a risk and you lose. That is what happens when you have a credit and fiat lifestyle.

I don't reel bad for these individuals who are getting harassed to return the funds that they walked out on, as they knew that this might happen when they walked away. The bank should not have to t take a loss on something that a homeowner willingly signed up for. If they didn't like the terms, they did not have to sign.

They made a guarantee and now they have to live up to that guarantee. It sucks, but it is reality.

I feel no pain for these individuals. I may help them if I meet one, but it definitely is not the case that they deserve help, as they acted just as irresponsibly if not more than the banks did.

"Whether, under any circumstances, it is okay to walk away from a property you still owe money to lenders on?"

Here are the circumstances where it is OK: When you reasonably perceive it is to your advantage to do so.

That is also the bank's standards for deciding when to screw their customers over, by the way.

Obama wants to make screwing the banks a national pastime.

#4 | Posted by Sully at 2010-03-10 09:28 AM | Reply | Flag:

Knowing this means that the individual is the one showing less responsibility in this case, and get what they deserve.

The banks gambled and lost too. They figured they could loan money with nothing down up to 125% of the purchase price of the home, and in the event of default, grab an asset that had appreciated substantially in value.

Oh well. We're all wrong sometimes, and have to pay the price. Ask yourselves: would you have LENT money to your best friend, under those terms? Probably not. Why? Because it's stupid. There are hundreds of solid banks who didn't act this way, and therefore don't have to be bailed out.

We should have let the bad ones fail, and their assets taken over by responsible banks, and we could have been on our way out of all this by now. But no.

I agree with the allowing them to fail and help absolve the problem, however there are probably banks that used good procedures that are going to be taken advantage of because these individuals were not willing to pay their debt.

They did both lose in a way, however the problem for the homeowner is that the bank has the means and the right to seek their collection, since the borrower signed the contract, they do not have the means or the right to go after the bank to drop or recollect any damages.

"We should have let the bad ones fail, and their assets taken over by responsible banks, and we could have been on our way out of all this by now. But no."

I agree 100%. Our economic system doesn't work if failures aren't allowed to fail to be replaced by the more competent.

"Knowing this means that the individual is the one showing less responsibility in this case, and get what they deserve."

The bank didn't like up to its responsiblity of properly underwriting the loan to begin with so it also deserves whatever it gets.

#10 | Posted by Sully at 2010-03-10 12:55 PM | Reply | Flag:

I'm afraid not. The individual does not have any ground to stand on as they signed the contract. The bank has the means to collect, and the collection process will be worse than if the person paid for it from the beginning. Not only will they lose their credit, but also their money and their name, and their ability to take out a loan for a long long time.

It is a risk on either part, unfortunately for the borrower who was not prepared, the bank has a means to enforce payments outside of its mistakes, the borrower who had this information ahead of time about the bank, does not.