Are you foolish to pay your mortgage?

[cjppjc]

This kind of thinking has a home here.


http://articles.moneycentral.msn.com...your-home.aspx


If you're 'underwater' on your mortgage, walking away might make sense, but when is it OK to set aside your responsibilities to your lender, your neighbors and yourself?

[Related content: homes, home financing, mortgage, foreclosure, bankruptcy]
By Liz Pulliam Weston MSN Money
Are you stupid not to walk away from an "underwater" mortgage, even if you can make the payments?
How to avoid foreclosure

Law professor Brent T. White thinks the answer may be yes.
White doesn't actually use the word "stupid" in his recent paper, "Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis." Instead, the University of Arizona prof blames emotion for clouding homeowners' judgment.
White asserts that the real reason more homeowners don't default is because of shame, guilt and fear, fed by misinformation about foreclosure's effects promulgated by the government, lenders and the media.
White doesn't just dismiss the idea that homeowners have a moral obligation to pay their debts. He thinks the idea of morality should be removed from their calculations entirely

[thriftyandboringinohio]

Re: Are you foolish to pay your mortgage?

White doesn't just dismiss the idea that homeowners have a moral obligation to pay their debts. He thinks the idea of morality should be removed from their calculations entirely

As bad as it sounds, I'm not sure how morality has a role in a business deal. The contract is what it is. I'm not confident that my mortage holder would be gracious, understanding, or honorable if I told him a heartbreaking story about why I can't pay him. If the written contract allows the borrower to choose between the pain of default and the pain of full compliance, then he can choose.

[jpatter666]

Re: Are you foolish to pay your mortgage?

As bad as it sounds, I'm not sure how morality has a role in a business deal. The contract is what it is. I'm not confident that my mortage holder would be gracious, understanding, or honorable if I told him a heartbreaking story about why I can't pay him. If the written contract allows the borrower to choose between the pain of default and the pain of full compliance, then he can choose.

I agree. It's nothing personal, just business. But I do think that the state rules considering whether a mortgage is recourse or not definitely skews things by making it much easier to walk. But the banks knew this...

[ricket]

Re: Are you foolish to pay your mortgage?

I agree. It's nothing personal, just business. But I do think that the state rules considering whether a mortgage is recourse or not definitely skews things by making it much easier to walk. But the banks knew this...

What if the contract itself is fraudulent? As in, there were missing statements that would lead you to believe that you can pay off your mortgage in it's entirety? When in fact, this is not possible for *every* mortgage, even in a perfect fully employed workplace.

[rabot10]

Re: Are you foolish to pay your mortgage?

What if the contract itself is fraudulent? As in, there were missing statements that would lead you to believe that you can pay off your mortgage in it's entirety? When in fact, this is not possible for *every* mortgage, even in a perfect fully employed workplace.

Sorry didn't get what U were trying to say.

[thriftyandboringinohio]

Re: Are you foolish to pay your mortgage?

..the state rules considering whether a mortgage is recourse or not definitely skews things by making it much easier to walk. But the banks knew this...

Precisely. I'm told that's why bankers get high salaries and bonuses, to watch all these details and get everything right every time so the depositor's funds are well-protected. If they blew it, too bad.

[don]

Re: Are you foolish to pay your mortgage?

It would be useful to have the underwater homeowner state of mind described in a short hand, catch phrase- the flip side of the wealth effect, that drove many to fill-up their driveway with SUVs, BMWs and tricked-out trucks. Ideas :confused:

[jpatter666]

Re: Are you foolish to pay your mortgage?

What if the contract itself is fraudulent? As in, there were missing statements that would lead you to believe that you can pay off your mortgage in it's entirety? When in fact, this is not possible for *every* mortgage, even in a perfect fully employed workplace.

This is getting into your signature tag line -- we're just discussing the contract morality/legalities here....

[ricket]

Re: Are you foolish to pay your mortgage?

Sorry didn't get what U were trying to say.

It's all based on the money creation system of the United States (that most people do not get).

We all know how banks create money out of thin air, most people just dont realize exactly what theyre doing or how theyre doing it.

Take a pool of 5 mortgages, each with a one time fixed interest rate (this is to demonstrate what Im talking about, the same rules obviously apply with compound interest as well):

100,000 + 5% = 105,000 that has to be paid back
150,000 + 6% = 159,000
200,000 + 3.5% = 207,000
175,000 + 4% = 182,000
125,000 + 7% = 133,750

Now, in the FIAT money creation ponzi scheme, the banks wont actually have this money. They will create this out of thin air. But the key is that they only create the principal and do not create the interest. In a small enough system (say all the loans at one particular bank), it is a mathematical impossibility for every loan holder to pay off every mortgage plus interest based off of the original dollar amounts created in the loans. In the example above the banks only created $750,000, but the combined obligation with interest that has to be paid back by all of the borrowers is $786,750. The remaining $36,750 simply does not exist, because it was never created. In the US, 100% of all money is created by extending loans, as that is the only way that money "enters" into the system.

What this does is it requires a small percentage of people in this loan pool to be forced into default, because there simply isnt enough money to go around to pay everything off. It's kind of like a game of musical chairs where there is only 1 chair left, but 2 people remaining. When you signed your mortgage contract, there is not a single clause in there anywhere that says you could be forced into default (because it's a mathematical inevitability for a percentage of the participants as proven above). Since this language was not in the contract, it makes the contract no longer valid because contractual performance is no longer guaranteed. It becomes fraud.

ASH and others have stated "money circulates" and that's how the "impossibility" is actually "possible", but I disagree. Money does not circulate when it comes to banking transactions. It's either being created (by extending a loan), or it's being destroyed (by paying off a loan). There *is* no circulation in a banking transaction. All other money transactions that circulate outside of banking are irrelevant to the overall equation. It's kind of like integration in calculus where you add the "+C" to the end because you really dont care what that value is because it doesnt affect the overall outcome.

[ricket]

Re: Are you foolish to pay your mortgage?

This is getting into your signature tag line -- we're just discussing the contract morality/legalities here....

Exactly. If a contract is not legal, then what morality is there to discuss in adhering to a fraudulent contract?

If you sign a contract to pay for someone building you a house, they defraud you and take your money, are you going to continue to keep paying the contract because you signed it? Probably not

[jpatter666]

Re: Are you foolish to pay your mortgage?

Exactly. If a contract is not legal, then what morality is there to discuss in adhering to a fraudulent contract?

If you sign a contract to pay for someone building you a house, they defraud you and take your money, are you going to continue to keep paying the contract because you signed it? Probably not

Ummm....not quite the discussion we were having. The question is not whether the contract is legal (we aren't having that argument).

The question (as I see it) is whether someone has a moral obligation to fulfill a signed contract. Many people are walking away from their mortgages even though they could pay them. In non-recourse states apparently this has gotten to be a big thing.

[ricket]

Re: Are you foolish to pay your mortgage?

Ummm....not quite the discussion we were having. The question is not whether the contract is legal (we aren't having that argument).

The question (as I see it) is whether someone has a moral obligation to fulfill a signed contract. Many people are walking away from their mortgages even though they could pay them. In non-recourse states apparently this has gotten to be a big thing.

Well, in the eyes of Justice (which is blind), since the contract is illegal, of course they have moral justification for just walking away! Justice only recognizes *legal* issues (hence the blindfold). Since the contract is not legal, there *is* no contract

[raja]

Re: Are you foolish to pay your mortgage?

It would be useful to have the underwater homeowner state of mind described in a short hand, catch phrase- the flip side of the wealth effect, that drove many to fill-up their driveway with SUVs, BMWs and tricked-out trucks. Ideas :confused:

How about "The Entitlement Delusion"?

"I'm just going to ignore the numbers and the facts because, well . . . I'm entitled to that that huge house and huge SUV and Caribbean cruise. My friends the Smiths have them, the people on TV have them, I should have them, too."

[don]

Re: Are you foolish to pay your mortgage?

How about "The Entitlement Delusion"?

"I'm just going to ignore the numbers and the facts because, well . . . I'm entitled to that that huge house and huge SUV and Caribbean cruise. My friends the Smiths have them, the people on TV have them, I should have them, too."

I think the wealth effect has that covered. What about the flip side? Fuck it! sums up a jingle mail attitude but is hardly usable ;)

[ricket]

Re: Are you foolish to pay your mortgage?

How about "The Entitlement Delusion"?

"I'm just going to ignore the numbers and the facts because, well . . . I'm entitled to that that huge house and huge SUV and Caribbean cruise. My friends the Smiths have them, the people on TV have them, I should have them, too."

Everyone is *also* entitled to be prosecuted for criminal acts and to be held accountable in a court of law. What makes Wall Street so different? How come they get to screw taxpayers out of billions of dollars in money without any ramifications, yet somehow people who made bad financial decisions should now "do the moral thing" and accept responsibility for those bad choices that affect no one *but* Wall Street banks?? Wall Street can make bad choices that ruin national economies and get away with it, but homeowners make bad choices and what happens? They get foreclosed on and kicked out of their homes, screwed out of the equity they have plowed into the home, and neighborhoods go to hell and become blighted.