VultureChow wrote:My two cents. Never, ever, ever feel bad about walking away from an underwater mortgage. If there is one thing in the whole downturn that has bugged me, it has been the suggestion that a homeowner has some sort of moral obligation to the lender.
Your only moral obligation is to follow the terms or your mortgage and the law. This isn't a gentleman's debt between two friends, it is a business transaction with a large corporate entity with a huge cadre of lawyers, and analysts. They are certainly better protected than you are.
Your agreement with them was to borrow money and pay them interest on that money with a physical asset as collateral. Assuming the loan is non-recourse, their sole remedy is to take the physical asset back. That was the deal, and they knew it. You didn't agree to pay them as long as you could, or to pay them before all other bills, or to blow through your savings to pay your mortgage.
And I say this as a commercial real estate developer. Hell, in our business, strategic default by non-payment is a well accepted practice. Because of CMBS loans, it may be the only way to actually get a special servicer to talk to you about a loan restructuring. It isn't something we've had to do yet, most of our loans are through banks we have good relationships with, but it's not exactly a mark of shame in this economy either.
why, with this attitude, would anyone want to "loan" money to others?
Is it so lucrative, that they can eat loans and it not matter?
Or, has the system worked, because for the most part, people took it as an obligation, that if the borrowed money, they should pay it back, no matter who loaned it to them?
How about, you buy your house, or commercial property, for cash? then, no worries.
Oh, what, you don't have the cash? And, neither do your friends?
Hmm.....what to do? Who, to ask?
Of course, if you can't pay, you can't pay. But, I don't agree, with it being inconvenient, to live up to the agreement you made, so it's ok to "walk".
but, I don't understand, the cutthroat business world, anyway.