4 Aralık 2009 Cuma

Is defaulting on your mortgage ever acceptable?

A law professor at Arizona University has caused quite a stir by releasing a new paper that argues more people should be defaulting on their mortgages, and that defaulting on a mortgage in excess of the current value of your home makes economic sense. He claims that in as little as two years after a default, an individual can have returned to having "good credit." He argues instead that what holds individuals back is (1) the cultural shame of foreclosure and (2) the moral sense that one should hold to a contract once signed.

Frankly, I find it encouraging that the professor finds so many people "acting against their economic interests" by honoring their commitments. It speaks well to American morality, which has been belittled of late. What do Mod-Bloggers think? Is he right? Or is it right to keep plugging away, even when you know you may be permanently underwater?

6 yorum:

  1. The value of your house on any given day is irrelevant. The value of a house only matters when you go to sell it. Continuing to pay off your mortgage is like continuing to put money into your IRA when the stock market is going down. It is an investment in the future. Odds are, the housing market will rebound for you unless you are in a geographic area that has a catastrophic economic hit. (ie. closing of Army base, etc...)

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  2. I can't speak to the economics of it, but it just seems that keeping your word is the right thing to do. I tend to stick with 'Let your yes be yes and your no be no'. The value of your house may go up and down, but you can only lose the value of your word once before people disregard you.

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  3. Bankruptcy and defaulting on your mortgage are wonderful protections we offer people who get in a dire financial position. That being said, walking away from your home should be a heart wrenching decision based on need, not a "I'd be better off if I break my promise." So, is defaulting on your mortgage ever acceptable? Sure. You lose your job and can't pay the mortgage and it's a choice between survival or paying your mortgage, you choose survival. If it's a choice between paying your mortgage or setting yourself up for a better house in a couple of years, I think morality dictates that you keep paying your mortgage.

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