Those who ‘strategically default’ are using system the way it was designed
A solid two years into the housing bust, the national foreclosure wave doesn't show the least signs of abating. Banks that had called a foreclosure moratorium are now back to the business of taking back properties, and the foreclosure numbers are again at record highs. As the foreclosures rise, so too does the criticism of “walkaways” who hand the keys to their drastically devalued houses back to the bank.
Last month a study from the credit reporting agency Experian and consulting outfit Oliver Wyman estimated that close to a fifth of troubled mortgages involved borrowers who were “strategically” defaulting — walking away from mortgages they could pay but decided not to because they owed more than their houses were worth. Self-assigned guardians of financial ethics see the willingness of borrowers to abandon their mortgage debts as a sign of the “erosion of social and moral standards.” The aim of these critics is to shame debtors into sticking with their mortgages. That's something debtors should take with a grain of salt. There are many good reasons to keep paying your mortgage and avoid the black mark of foreclosure, but the immorality of sticking the bank with a loss isn't one of them.
Some observers, like Zubin Jelveh of the New Republic, have taken issue with the Experian-Wyman study's methods, arguing that it was too broad in defining “strategic” default. But unlike some other reports that play up the number of deadbeat debtors, this study uses a fairly narrow and defensible definition to arrive at its conclusion that 18 percent of mortgage defaults are “strategic.” (Experian showed the report to The Big Money, but asked that it not be posted.) The study focuses on borrowers who, once they hit 60 days late, roll straight through to foreclosure without ever making another payment and manage to stay current on all their credit cards.
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11 comments:
There's no link at the GO HERE at the bottom.
The article can be found here:
http://www.msnbc.msn.com/id/33295860/ns/business-the_big_money/
I read the whole article. It's nothing but an Opinion piece by someone with no moral values.
If your signature on a contract agreement no longer means anything, then can the fall of this once great country be far away?
dear 10:01,
look aroud you the country has already fallen to the socialist! people lining up to "get me sum free obama money"! so only industry is allowed to screw someone and get away with it?
screw the banks, they been screwing us for years!
and by the way I am paying my mortgage. I didn't fall for the hype way back when!
10:28,
How is an agreement someone signed, with a promise to pay back a loan, that both parties agreed upon, turned into the bank being an "industry allowed to screw someone and get away with it"?
I got a loan at 5%. I pay my mortgage. If the value of my home goes down (and it certainly has) then all of a sudden the bank becomes an "industry allowed to screw" me?
OK, I'll stop making my payments, the bank will go belly up, the bank then lays off its employees, and the local economy suffers all the more. What a wonderful plan!
Please reevaluate your comment about "the country has already fallen to the socialist" because your comment equating loan contracts to "industry [being] allowed to screw someone and get away with it" is the exact thinking of the socialists who are trying to take over (and doing a good job of it using that exact same rhetoric).
The bailouts were a joke. The common persons that are being thrown into the streets are the ones that should have been given monies paid on their behalf to the mortgage companies. The banks are taking it and shoving it straight to the man once again.
I pay my mortgage also but unfortunately fell on very hard times over the summer so I fell a month behind. I have been trying to catch up and even made an agreement with the bank to make special payment arangements, to get caught back up. Only problem is I paid the first payment online so we could start the new temporary agreement immediately, apparently Citimortgage decided to wait 3 days to take the money out so the same day I got the contract in the mail to sign and return I also got a letter saying I did not keep to the terms by paying my mortgage on the 20th (which I did they just did not deduct the money even though it was there for them to do so), so I violated the contract and they would not honor it!
I don't want to lose my house, I don't want to look for another place to live or have to deal with all the tape of foreclosure, but at the same time it's like the mortgage companies are trying to put people out.
Maybe because my house is one that is holding a fairly nice resale they want me to lose it so they can make more money at a foreclosure sale? I don't know. What I do know is it makes me so furious that I would like to yank some of those SOBs through the phone.
I am not in this situation because I want to be, I am in this position because a great portion of my household income comes from a commissioned position. If people are not buying these certain items my household income suffers are a result. The banks are bailed but what about the every day man? We are the ones that are suffering through no fault of our own.
I dont care anymore. Just let go.
So I guess they would give back to the bank any appreciation that they would garner - they will be happy to keep any gains but don't feel that they should suffer any loss???? UNBELIEVABLE!
A few years ago I was looking to buy a house. The mortgage agent I worked with fudged my income and did a few other unethical things to get me qualified for a house I could not otherwise afford. I chose not to go through with the deal, but if I had, and eventually forclosed a few years down the road, why am I considered the a**hole? The truth is, a lot of these banks and mortgage companies do a lot of shady stuff and give away a lot of loans they should have never given out, (not to mention tricking consumers with their fancy interest first and ninja loans) then when their business crumbles the government has their back. Just not right....
Rob S
I did everything right, I played by their rules and I believed in it, the dream. I worked my butt off and now I will become economically unviable. You know, the things I possess that matter to me can never be touched by economic woes or anything else for that matter. How rich am I? Could of never had any off it to begin with. Perspective is what leads you to yourself.
12:10, those on the right will tell you to suck it up! It's all your fault. No help is on the way. Sink or swim buddy
8:10, those on the left will tell you that you are a poor victim, banks and business as a whole are all bad guys, and the world owes you a living. Whine and protest buddy.
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