The problem is that you're buying something today and paying for it for the next 15/30/50 years.
Sareitha Sedai Send a noteboard - 13/10/2010 03:04:26 PM
Say you buy a foreclosed home from the bank that writes the mortgage. For simplicity's sake let's say you buy the home for $250,000, finance 100% of it, and that's the appraised value of the home.
In five years you are still making mortgage payments. The home now appraises for $325,000. Is it moral for the bank to tack that extra $75,000 onto the remaining loan principal?
In five years you are still making mortgage payments. The home now appraises for $325,000. Is it moral for the bank to tack that extra $75,000 onto the remaining loan principal?
That's basically a like shorting a property, from your pespective. You buy in the hopes that the value of the property goes down (to be fair, the agreement should work both ways - if the property depreciates, so should the amount of the mortgage you owe). I don't see why a contract couldn't be written that way. (Except if you were doing this with stocks, you'd have to put up collateral to insure against the risk of the losing party simply walking away. Positions are then valued daily, and if the the amount of collateral becomes insufficient, you may be forced to close the position.)
A real-life example is an adjustable rate mortgage - if interest rates go up, so does your mortgage payment. Yes, very legal, and very many banks did just that. It's all a matter of how you structure the legal agreement.
The bank accepts your house as collateral for the loan. It is the bank's burden to ascertain that the value of the collateral is sufficient to cover the value of the loan in case of default. Period. If a bank writes a mortgage for $100,000 on a property worth $80,000, it deserves to lose the money - it's acting stupid and greedy, not considering the risks.
The whole point is that this isn't like an ARM situation, where both parties have legally agreed to the loan amount floating based on some benchmark. It's a one-time valuation and a one-time sale, and is a non-issue if somebody pays cash for the home. The bank at the inception of the mortgage is loaning money against the value of the home at that point in time, and the homeowner is agreeing to purchase the home for a price based on that same value.
If you are from Betelgeuse, please have one of your Earth friends read what I've written before you respond. Or try concentrating harder.
"The trophy problem has become extreme."
"The trophy problem has become extreme."
Is walking away from a mortgage immoral?
12/10/2010 04:45:43 PM
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Just as a contract is a two way street -
12/10/2010 05:12:09 PM
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Of course it's immoral.
12/10/2010 05:13:16 PM
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But does one sided morality work?
12/10/2010 05:38:56 PM
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You asked about the morality of walking away when the borrower still has the ability to pay.
12/10/2010 07:31:10 PM
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A company or organization cannot act morally or immorally? I strongly disagree. *NM*
12/10/2010 07:50:42 PM
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No, it cannot. However the individuals making the decisions for the company can. *NM*
12/10/2010 08:48:23 PM
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If banks can not behave in moral manner why should people be expected to behave in moral manner?
12/10/2010 08:07:56 PM
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I'm not absolved of my obligations based on the bad behaviors of others.
12/10/2010 08:25:33 PM
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Because it's their moral obligation. Morality is not a trade, you act morally because it is right
12/10/2010 08:47:41 PM
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That's the only kind of morality there is! What the hell is wrong with you?
12/10/2010 08:15:55 PM
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nothing wrong with me but I think you are off your meds again
12/10/2010 09:34:33 PM
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Re: nothing wrong with me but I think you are off your meds again
15/10/2010 02:50:49 PM
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well I really can't argue with the wrong is wrong end of story belief system
15/10/2010 05:40:22 PM
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A contract isn't a promise; it's a legal agreement. *NM*
12/10/2010 06:25:24 PM
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Which is why contracts have to be pages and pages long and combed over by bloodsucking lawyers.
12/10/2010 06:39:18 PM
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I would agree with you if contracts didn't provide for breaking them.
12/10/2010 07:33:15 PM
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Hrm.
12/10/2010 07:35:38 PM
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did you take a personal oath in front of god and your loved ones to pay the loan back? *NM*
12/10/2010 08:09:07 PM
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Let's assume we're talking about a marriage where no such oath was taken... *NM*
12/10/2010 08:10:54 PM
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if there is no oath of fidelity then straying would not be immoral *NM*
12/10/2010 08:40:53 PM
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It's not immoral to break the marriage contract.
12/10/2010 08:19:50 PM
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That must be why they have you sign something called an agreementory note *NM*
12/10/2010 07:33:32 PM
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I don't think it's immoral at all. The contract usually specifies penalties for breach.
12/10/2010 05:28:34 PM
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You didn't mention the third party
12/10/2010 08:26:56 PM
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in a way I did since I did mention society
12/10/2010 08:54:07 PM
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What if you look at it from the other perspective?
12/10/2010 09:00:20 PM
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Sure, you could do that.
13/10/2010 01:54:55 AM
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The problem is that you're buying something today and paying for it for the next 15/30/50 years.
13/10/2010 03:04:26 PM
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As a professional in financial services - no, it is not.
13/10/2010 01:44:18 AM
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but almost nobody sees it that way
13/10/2010 12:53:25 PM
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Is the deal that if you default, the bank gets the house and nothing else, though?
13/10/2010 02:40:48 PM
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I think it's morally wrong to walk away from credit card debt. *NM*
13/10/2010 09:43:11 PM
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I agree, what do you think is different?
13/10/2010 09:59:36 PM
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The difference is that the bank owns the house. Whereas when I buy stuff, it's mine. *NM*
19/10/2010 07:05:34 PM
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I too am unable to work out what distinguishes the two situations.
13/10/2010 11:54:15 PM
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I lost sleep over it, but I did it anyway.
13/10/2010 05:24:19 AM
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Obviously, the essential difference is can't pay versus won't pay.
13/10/2010 02:16:07 PM
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are you socializing your debt when it is a private bank?
13/10/2010 03:14:48 PM
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You are when said bank requires a bailout. And very many of them do.
13/10/2010 03:22:59 PM
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I really don't understand a system where this could be an advantage.
13/10/2010 11:16:57 PM
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There's generally something like a 7 or 10 year limit on credit reporting here.
13/10/2010 11:46:58 PM
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What's the use of suing someone who has no money? *NM*
13/10/2010 11:48:47 PM
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You can garnish their wages.
13/10/2010 11:49:36 PM
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With parsley?
13/10/2010 11:51:37 PM
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No, "someone" most certainly did not, wicked young Miss! Hmph! *NM*
13/10/2010 11:52:40 PM
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If they suddenly come into some, you're entitled to it. *NM*
14/10/2010 12:07:34 AM
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Bit of a long shot. *NM*
14/10/2010 12:09:12 AM
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Very. Best to cover your bases though. *NM*
14/10/2010 10:04:25 PM
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Not if the doctrine of election applies.
14/10/2010 10:14:07 PM
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Are we not talking about credit companies going after people who owe them money?
14/10/2010 10:18:47 PM
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I am currently in that situation...
14/10/2010 05:03:23 AM
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In Washington you can contest the assessed value used to determine property taxes.
14/10/2010 07:27:02 AM
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it is easy for me and others to be glib when it is just a theory *NM*
14/10/2010 08:19:16 PM
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If you have the ability to pay, I would consider it yet another immoral act in an immoral industry.
14/10/2010 07:49:38 AM
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