May 9, 2010
(AP Photo/Patrick Semansky)
Last Sunday’s 60 minutes featured a piece addressing the estimated 1 million families who had defaulted on their home loans and walking away in 2009, although they could have afforded to stay. The practice of abandoning homes that are “under water” can be easily justified in financial terms, particularly in those states where one’s other assets are protected. But what about the ethics our parents lived by, calling for one to pay their debts.
One owner who had paid just 10% down on a house that lost nearly 50% of it’s originnal value was asked:
“Aren’t you fearful that you’re gonna get a reputation as being a deadbeat?” Safer asked.
“Yeah. But with the money savings that I will have in four to six years, I’m confident I’ll have money to buy my way into a house if I want to,” he replied.
I find the strategic practice of stopping payments, but staying in the home until being actually evicted, to be particularly underhanded in traditional ethical terms, although it probably has a minimal impact on the bank’s bottom line.
The complete 60 minutes story and additional material online