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Show Me The Soul...

It is an interesting journey, started with Richard Zaretsky's blog "WALK AWAY FROM THE PROPERTY - STRATEGIC MORTGAGE DEFAULTS GROW TO 26%", then Bryant Tutas accelerated it to a fascinating discussion with his Morally Wrong....OR...Financially Sound? . I bounced of it with Painfully Adjusting to the World.

Some great comments. Like this one below made by Lenn Harley. It is a strong and unforgiving account of the mess we are in. Lenn's position, often seen in bits and pieces in other comments, is spelled here clearly and with conviction. For those of you, who did not read the blog and comments, here is Lenn's comment :

Lenn Harley Show me a morals clause in a deed of trust or note.

Level the playing field and give the home owners the same help given the banks and the Wall Street Gangs.

The United States will suffer for the next 10-20 years for letting the American home owner twist in the wind while saving the butts of the Wall Street Gangs and each other.

Bryant is right. This is not a morals issue. This is financial survival for many home owners.

In my blog I was trying to see how we change our opinion on the changing reality with time. How many of us looked at these issues differently just couple of years ago? How many of us denounced it then, and are more tolerable today? I am not arguing the cause, not looking at the anamnesis. Lenn might be right in her analysis of what & why. I was simply looking at us then and us today.

The dictionary definition (one of them) is "Of or concerned with the judgment of the goodness or badness of human action and character"

For me it can't be just financial OR moral issue. It is both. We can't separate them. Morals define how we, humans, see our actions. We judge, and we judge everything. Yes, it may be OK to do something because it is so rampant and widely used and accepted, but we may still be not at peace with ourselves.

We have an elaborate and all-encompassing system of laws. Do we need morals? Laws is when a person would not steal because of the punishment for the crime. Morals is when the person will not steal even if nobody see it, and nobody will punish. Without morals robbing a bank may qualify as good financial decision.

"Show me a morals clause in a deed of trust or note."

You are right, Lenn, I can't. As I can't show you the soul in any, even the most deserving human being in the world.

But we all know that it is there.

Don't we?

Posted by Jon Zolsky, your Daytona Beach, Florida connection on 07/08/2009 06:30 PM

Comments (48)

Morality in the ActiveRain Channel

real estate opinion, real estate discussion, jon zolsky, daytona broker, daytona beach broker, morals

Originally posted at: Jon's Blog: Show Me The Soul...

Post is included in group: Silent Majority
Post is included in group: Realtors®
Post is included in group: REALTOR LIFE
Post is included in group: Dissent
Post is included in group: Diary of a Realtor

48 Comments on Show Me The Soul...

JUL

Well, when you sign a contract, you are giving your word. And yet, if the banks continue to behave without moral consciousness, why should regular people treat the banks honorably?

Maria - I am giving a word, and then the economy goes into recession and i lose a job. There is no longer loyalty from big companies, when you work, a dn they take care of you. So when you sign a mortgage, yo know that you are paid regularly.

No more

NO! NO! NO!

As a country of laws, we follow the law. THE LAW!

Kindly leave the moral judgments to the keepers of morality, the religious leaders of the various institutions who provide moral leadership for their followers.

When we begin to merge the law with religion, we have a system that will protect only the followers of that particular belief and discriminate against the rest.

Since I do not believe that it is a matter of morals when a family makes a decision to abandon a home that they love because they can no longer pay for it, does that make them and me, who supports their financial decision, persons of immorality???

If we slide down the slippery slope of favoring one persons moral judgment over the lawful judgment of another, we lose our ability to, not only follow the law, but to be a country of laws.

If I see one thing in the statements of those who profess a moral need for folks to sacrifice their family's financial security to pay for a home that is draining them of any financial future, I see only sanctimony.

The LAWS OF THE LAND ARE WRITTEN. We can all read it. We can all understand it. We can all follow it. Break it and there may be consequences.

MORALS ARE A BELIEF SYSTEM. The system one follows may be totally different from the system of another. Which is more moral than the other, or all the rest???

Sanctimony leads to classism, discrimination, groups believing that they are more right than groups of another belief system.

Folks who make a decision to "let their home go" will suffer enough. The mortgagee will have the rights and privileges written in the mortgage and may use the law to repossess the security. They will follow the law to enforce their rights.

Don't forget, there are systems wherein the believers of their morals are the one system that is right and those who do not follow the religious leaders of those system or morals, some written some centuries ago and some unwritten but by decree, believe that they have to right to kill you if you do not follow THEIR morals.

Jon,

I am sure this will be featured as it is very good.I just featured this on silent majority. I feel for the people losing their homes for sure. Being on the front lines helps to understand their pain.

Jon - I am going to be firmly ambivalent on this. While I agree with Lenn, there are those, many, that went into that contract with full intention of fulfilling the obligation. However, sometimes, circumstances prevent that from happenning and they have to walk away. There is no moral breakdown, that I can see. However, I have also seen those walk away for other reasons, they could meet those obligations, they could keep that promise they made, but would have to give something else up, and they chose also to walk away, and maybe take a few pieces of the home, like appliances, etc. In that case, I believe that they have made a moral decision, or a decision to violate some acceptable community moral.

As much as we (I) would like to paint things in black and white, there appears to be more gray out there.

it is not fair to give the Banks a fresh start while the homeowners continue into a downturn slide that is going to help noone except the banks..which will not stimulate our economy only the banks pockets..

Since when did the banks turn into the institutions that controlled the destiny of America...It is not and by not helping the homeowners they are turning this country into a recipe for disaster as we all sit and watch..

What I would like to know is now that we are all sick of watching how do we stop them and what can we do to help..

Maybe we should all unite and stop paying our mortgages,bills and taxes to get the message across that we are fed up?

I absolutely love Mary's suggestion. We should bring these nefarious institutions to their knees.

It saddens me that this has become a moral discussion. The banks look at everything based on computer algorithms and defend their actions based on "business decisions". There is nothing moral about how the financial institutions are acting.

Frankly the American Consumer and those of us that work with them should do our best to take the "moral" question out of it. Make it a business decision. If the banks job is to protect their stockholders, then the family's job is to protect their stockholders - the members of the family.

If that means making the business decision to walk away from a home in order to preserve the financial viability of the family in the future, than it's a sound financial decision.

The problem with the moral argument is that it keeps people from making sound financial decisions based on guilt and pride. I firmly agree with Lenn's stand on the issue.

To be fair, we hear more about the bad companies than the good and the bad banks and not the good. Do you remember the banker who helped his own employees and Obama had him recognized? There are good companies and good banks--let's not let the bad apples to spoil the bunch. (Michael Jackson had a song like that when he was very young).

I happen to agree with you and disagree with Lenn. You heard me right, I disagree with her. While she may be right in black and white, let's face it, we all don't live in black and white, and there are provisions in place to penalize those who decide to strategically walk away from their mortgages.

Right, wrong or indifferent, I am pissed off that my sons are going to have to bear the financial burden of those people who walked away from their mortgages. Let's not be coy - someone has to pay for all of it. Because the banks are going to be made whole - don't get me started on the smoke and mirrors of the FDIC and the Federal Reserve...All they are is guarantees made to big banks that they'll be made whole, on the backs of taxpaying Americans throughout our country.

If you make a commitment to pay a loan, then pay it. If you have a financial hardship and can't feed your kids because you lost your job, got divorced, had medical issues, etc., then I am with you. Ditch your mortgage. But if you are making a decision to NOT pay your mortgage because your home has lost value that's crap. Since when do we change decisions simply because it's not sunny outside anymore?

And since when do we make decisions based upon 'well the banks got bailed out'? Nobody ever said the world was fair. You can't make it fair by walking away. All you do is shaft the rest of us because we all have to pay the taxes to pay back the amount you walked away from.

Lenn- Thus my comment on Jon's first post regarding the morals issue. Morals have nothing to do with credit or whether you can pay for something or not.

Jon- However unlike Lenn's experience where the homeowners are trapped in their homes with no equity- there is here in this part of Florida a lot of people who should not have bought what they bought. While I don't think it is immoral for a landscaper making 35K a year to buy a Million dollar home I do think it is a bust waiting to happen. While I don't think it is immoral to use your home as an ATM machine, I do not feel sorry for you going into foreclosure. That is just math that did not work. I do think it is irresponsible to behave in this manner because you are then participating in bringing down the values of your neighbors home. We had that happen in an entire subdivision down here. IT is a tragedy for the people who bought in that subdivision to make their home their home not a commodity to gamble with and they now are effected by the actions of those that wanted to gamble with the market. Katerina

LENN: Kindly leave the moral judgments to the keepers of morality, the religious leaders of the various institutions who provide moral leadership for their followers

Lenn, your post confused me

seems you are implying that atheists are immoral, if morals are a religion thing?

And laws are based on the morals of the community. Stealing is illegal because alot of people decided, based on their morals, that it is wrong.

some counties outlaw liquor, some have a bar on every corner.

some states, ok just one, has prostitution, others made it illegal

Maybe I think Might Makes Right. That means if I can take it from you, it becomes mine. And since Might makes right, it is not stealing. Get enough people to agree, and the law suddenly changes

laws are nothing more than codified morals

Definately a sad situation all around, as I commented in the other related posts. My husband would say, as in his law enforcement profession, "I didn't write the law, I just follow it." Me, I always find a little gray....never seeing all black or all white.

Anyone ever hear the phrase "it takes 2 to Tango?" The banks are just as responsible for making these loans and tanking the housing market. Bottom line is, you made a deal, and you gave your word, but if the bank that gave you the loan also contributed to the housing market bubble, which in turn made your house not worth what you paid for, then why should you be bound (or even morally obligated) to pay someone who just cleaned out your equity and is getting a bailout from the government? Hello? McFly, you in there?

The difference between your bailout and mine, is that yours came from the government.

I have seen too many good people in such bad situations that they could not keep up with the mortgage and they lose the home. If the banks were carrying them for 30 years anyway, why can't they give them a 6 month to a year reprieve to try and save their home?

Sometimes the money will only go so far. Simple as that. Can't get blood out of a turnip. My grandfather lost his farm during the great depression because he let hungry people have food from his little country store on credit and then they couldn't pay him back.

Sarah in Nashville

I like to follow the golden rule. I wouldn't want someone stiffing me on money I loaned them so I won't to it to anyone or any bank. I believe in karma and what goes around comes around. Go ahead and rationalize that a strategic foreclosure is OK. Just be prepared for the pay back when it comes around to bite you.

Jon~How about this, you buy a car it costs $25,000 In Nj You add 7% sales tax registration fees , If you buy from a dealer Documentation fees a couple of more state fees at least in NJ. The $25,000 car winds up costing you about $27,000. As soon as the car leaves the lot it is worth20 to 21000 tops. Should you not pay the loan just because you may now 0we $27,000 on a car worth $21,000.

With the current economic model we have, these sorts of things will always happen, as human behavior is complex and often contradictory.

Lenn has a point... If we are willing to accept the consequence (loss of the property) then there isn't a reason not to stop paying... let the contract rule...

JUL

The fact is that when owners become 25% or more undewater, inceasingly they are deciding it just isn't worth it to hang on to the house.

Sharon

Lenn - I am supposed to respond, I will just a bit later, I am still thinking, and with age I am getting slower. What you wrote is more than a comment, it si a post in itself, it is a statement, a very important statement, I just need to think more to make it worth you reading.

Mike Frazier - Thank you. It is the time when we need to find the ways to put together the mind and soul, the brain and heart. In times of crisis, this is always a challenge.

Mike Saunders - "I am going to be firmly ambivalent on this", I think I need to start writing the gems like that. But it is fine for as long as it is firm.

Interestingly, I find it surprising, that you and many others are still responding to the previous blog about walking away from the paying the mortgage, and whether that was a moral issue, or strictly business. maybe the topic is so hot, that it just carries over...

I know that we are not going to answer it, and in that I am also ambivalent, may be not as firmly as you, though.

I know that there are gazillion people walking away, and gazillion people doing other things, that they have not been doing before.

I am simply trying to understand what I as a person should do about it. What my attitude should be. Not to a case by case, as we would drown in them. I need to step back so that no particular case, no matter how striking it is, blurs my vision, and I am asking myself where is GOOD and where is BAD.

Not who is right and who is wrong.

Christianne summed it up perfectly. It's one thing not to pay because you can't afford to and it's another to not to pay because the value has dropped as Bryant has stated. They're both wrong, but there are exceptions to moral issue. If you steal bread at the store because you are hungry and can't afford food is different than if you steal bread because you think you shouldn't pay $2.50 for it. We are forgiving to the person who can't afford the food while we frown upon those who just steal. it's that simple!

I am so suprised how much ignorant responses this whole topic has created when the answer should be clear. Maybe I am the ignorant one and am unable to understand the issue here. Jon, help me out here!

Fascinating discussion.

"In my blog I was trying to see how we change our opinion on the changing reality with time. How many of us looked at these issues differently just couple of years ago? How many of us denounced it then, and are more tolerable today?"

I would like to give you a another perspective and go back in time a little bit further. I started in the business in the 70's and went into the escrow field within 6 months. Back then, contracts were two pages and loan packages were 12. The borrowers and the banks generally never really thought in terms of not telling the truth. About that same time, things changed - Somewhere in California there came along a court case called the "Wellingcamp decision" and it had a powerful and long lasting effect on the relationship between the borrower and the lender. Too detailed to review here but, in essence, a borrower sued Bank of America for the right to take over the existing loan in lieu of formal assumtion because he believed the written loan documents (remember very limited packages) did not specifically require that he formally assume. He won and for a period of time it was open season on banks and borrowers buying homes and taking over any loan they wanted, regardless of ability to qualify and pay. This happened right about the same time that Volcker came to the fed and began to increase interest rates from 8.5% to about 16% within a very short time - that was frightening. Thank goodness I was too young to understand the full meaning.

But... I watched interesting things happen and from today's vantage believe that some of the seeds of trust came undone in that time. "Creative financing" really took off with Wrap-around loans, subject to assumptions (means you don't qualify), Purchase prices, with cash back to buyers for supposed work that maybe did or did not get done, Lease options of all kinds, FHA loans to borrowers who really would never live in the house. As a little ole escrow secretary, I saw and wondered about what was happening. At that time the lender was not really considered a principal to the transaction at that time and escrow companies would literally follow the directions of the agents and parties only. As a result of the actions of a few bad eggs, new process's and procedures were put in place (many good ones too) and the loan packages grew into the monstrosities they are today.

I know I took a long route to get to my point, morals or not, we all have a center compass that drives us to make decisions and it changes based on the dynamics of our current times. There was a unique moment in real estate history when most of the bad guys really were the buying & selling public.

"Yes, it may be in OK to do something because it is so rampant and widely used and accepted, but we may still be not at peace with ourselves. "

I don't know if it's morals, ethics, or just what is best for the individual. My observation is that actions happen in groups because of the climate of the times. Unfortunately the 70's was a major storm and this seems to be an ice age.

Mary - where I agree with you is that we should understand that we are sliding down and that there are no quick fixes that can stop it.

Many were saying it all along. We had an option to correct the wrong government intervention, starting this mess, which caused subprime. Instead we decided to correct it on the other end of the stick. And just made it worse.

We had the chance to let the market to correct itself, but some decided that they are smarter than the market, so they decided instead to correct the market, and they have already proved them wrong.

We can keep the list going, but the trouble is that MONEY HAD BEEN WASTED, ARE BEING WASTED AS WE SPEAK, AND WILL KEEP BEING WASTED if we wait and do not stop it.

Lenn, is correct in we are a Nation of Laws. We sign a contract we are obligating ourselves to full fill it. Bottom line. No one to blame but ourselves for putting our John Henry on that.

However, blood can not be drained from a turnip. If there is loss of job, or illness or a move and the market has tanked, you have drainded your finances then you have to let the house go. You can let it go 3 way, short sale, deed in liu, or foreclosure.

My issue is when people Just see their equity gone, have a good job, are able to pay and then walk away.

Not happening much here but I have seen it with 2nd homes.IMO it is called character, integrity and honesty.

The word morals brings in a religious conotation and it is really character. You either have it or don't.

You can have character without religion.

I don't wish to hog this post, but something Missy wrote brought up something that has been a great influence on my thinking in the past couple of years.

Missy wrote: "My issue is when people Just see their equity gone, have a good job, are able to pay and then walk away."

To me, these are the millions of home owners who are being held prisoners to a mortgage company. Can they continue to make their mortgage payments for a property that is now so over leveraged that it makes no financial sense??? Perhaps. So what?

Just because they can make the payments, should their lives be devoted to paying for an asset that has lost half it's value, through the perfidy of others??

While they are making their mortgage payments for a greatly devalued asset with greatly devalued dollars, their once loved home becomes like a millstone around their necks, pulling them deeper and deeper into negative balance with an income/debt ratio that has doubled since the acquisition of their home.

It makes no financial sense and, unless they can gain some relief, many will not be able to participate in many other economic sectors such as consumer goods, education, travel, automobile market, or many other activities or markets in which they would otherwise devote a percentage of their budget, if that huge percentage of their income was not devoted to paying for a home mortgage that strips them of many other pleasures and necessities of normal family life.

I paint a dire picture because I'm simply looking at the numbers. A home buyer who, in 2004 qualified for a loan by committing 30% of their gross monthly income for housing who now finds that it takes 50% of their gross monthly income to remain current, has no money for anything else because their after tax income in paying their mortgage.

The negative result of this picture will continue to be a drag on the U.S. economy for decades to come. As the retailers who have failed in the past 6 months. They know that the consumers are not out there. How can they be? Their income is devoted to paying their mortgage.

Banks are corporations that do not have a soul. People have souls and morals. A Corporation operates by a bottom line. Not morality.

Kate - "Frankly the American Consumer and those of us that work with them should do our best to take the "moral" question out of it. Make it a business decision. If the banks job is to protect their stockholders, then the family's job is to protect their stockholders - the members of the family."

Look, we had it as a business decision. It was when we signed the contract and obligated ourselves to pay. When somehow that obligation became not an obligation by all means, but rather a matter of choice, an opportunistic decision, now it became a matter of morals, because now it depends whether you wold take the advantage, or not; to what extent you would take this advantage, etc.

When it was not a moral thing, you sign, and if you do not pay, you lose the property through a procedure, and you knew that. There was nothing about bailout, or renegotiating.

So, if you were content with the financial institutions when you signed the contract and got the money, then why do we now call them all the names we can think of? They did not devalue our properties. They just gave us the money. We are finding the ways not to pay back, and we are bashing them?

People walking away, in a sense, is the market correcting itself. The sooner the market is back to realistic value, the better off everyone will be. Buyers can start buying houses again with the knowledge that their investment will be safe.

This is not just about buyers and principles or morals anymore, this is about a massive epic fail of the system on all levels.

The law is the law and we need to follow it, whatever it is.

Patricia

Goodness - The comments in here are long enough to turn every last one into a blog post of their own.

I am going to say that, for the most part, I agree with Christianne, and to a lesser extent, with Lenn. I liked Daniel's rebuttal to Lenn as well.

As for what you've said Jon -

- this is the heart of the debate that ensued between all of us when Bryant Tutas posed that question in his blog post. Indeed, it is both, and in too many cases, we cannot separate the legal and moral aspects of an action, because the legal aspects are oftentimes founded upon the moral ones.

A young family, with two small children and a succussful small business could have never seen it coming.

Say what you will about 'abandoning' homes.

But I can tell you from first hand experience that I NEVER saw my husbands successful sales being cut IN HALF, along with our income.

Nor did I see me being laid off from TWO jobs within a year. The State Farm office I worked in closed, the agent decided early retirement over losing the rest of his shirt with that company.

The Cigar export company that hired me to work under the controller abruptly went into aquisition after the notice of import fees going from 5 cents a peice to $1 a peice arrived. I had the least amount of seniority, so I was first cut.

At one point we had a savings account. A nice home that was WITHIN our means. But these things happened.

We struggled for over a year to hold our heads abover water before I became severely ill from stress and hospitalized.

With no insurance, my medical bills were out of this world, and we had to let everything we worked so hard for go.

We didn't fail the housing market, the economy failed US.

Jamie Bullock

Monika - I do not believe in good and bad businesses. For me these are Christmas stories, nothing more, and they fade even befor e the holiday is over.

Banks are businesses and as such are for the highest profit witin the ocnstraints of the law.

Though there is always some government involvement, it is very tricky, as often good intentions turn unexpected consequqences. The idea of correcting the market is not new, tried so many times on all levels, and ranges from the minimal on free market to controlled (socialist cuntries and dictatorshops). The balance is an art.

Unfortunately this art form looks like lost

Banks got Billions for the "Troubled Assets" they created. wtf did the avg joe get? a bankrupt govt that our grandchildren will be paying for

any bailouts should have gone to Taxpayers or small business. not multinational conglomerates

JUL

Great post. I sense there is an uprising simmering among the American people who are getting sick and tired of the way they continually get handed the short end of the stick. People are angry. And justifiably so.

JUL

Christianne - When we open the sluices on the canal, the water rushes through and it takes everything with it. You may even try to resist, but the might of the flow will suck everyone into it.

If we have created the new river bed, we should not be surprised that the water rushes there, all water this is. And it brought us all that. Those who deserved, and thhose who didn't. They were not in the same boat, but they went underwater together.

No easy fixes to easy actions. Fanfare is always at the beginning, tears are always at the end

Katerina - You, as always make a lot of very good points.

"I do think it is irresponsible to behave in this manner because you are then participating in bringing down the values of your neighbors home."

Yes, it affects the values, but still indirectly, when the properties are sold as REOs for pennies, and why for pennies? Often there is not justification for these numbers.

You see, there was a contract on the table, and if people would have to perform to the letter, they would have. Yes, it has the provisions for What if. There is a procedure how to handle if the borrower is in default.

When the government is adjusting this procedure, because they were the ones who pushed the lending industry into the sub-prime mess n the first place, then they are opening the floodgates. Now, those who are responsible or not responsible and everyone who is in between are picked by the rushing waters. Floods always bring a lot of mud. Our grandchildren might still be shoveling it when we are no longer here

Daniel J. Hunter - I really like your comment. Yes, laws are codofied morals. Yes, morals and religion are not the same.

Until today I thought I am an average person in terms of being moral, but I have no clue about any religion and never had any attachment to any religion.

And this does not preclude me from always deciding on what is right and what is wrong, which is often a moral dilemma. And we all go through that whether we are religious or not.

With Might Makes Right, I think this is a terrific phrase. Take Bernie Madoff. Confirmed $12+ billion, and an outrage, and 150 years in prison... and we are still angry. Because he did not have the might.

Take our president. Several Trillion Dollars wasted and being wasted as we speak, and historians and storing ink to write it in history books as unbelievable achievement.

Tina - let me go with your husband's words. The law was the contract, which he would be enforcing. But before he did, someone changed the law.

Before we knew that we would have to go through foreclosure if we do not pay, now this became a gray area (using your words). If we can't pay, we now can change the contract and do Loan Mitigation.

I am surprised at the number of blogs around this subject, and the number of responses

very enlightening indeed

Nogui Aramburo - Very interesting comment. If to look at it as the consumer against the Banks (or the government), that it is just a matter of the what the number dictate.

But the fight between them affects us all, and we do not even know all the angles, and all the small and big things that will be affected. It is a major shift. Nobody knows what the outcome is going to be. I am afraid that no matter who wins, we, as a society might be the loosers.

David M. Childress -if they change the agreement, this is Loan modification, and it is a matter what they can and can't do. an make a lot of sense, even though we need to proceed with caution, as many people who got loan modified, failed within just 6 months, as I heard

JUL

Sarah & John - "Sometimes the money will only go so far. Simple as that."

Absolutely. And it is not always the result of poor planning, or being irresponsible. Like in your example.

It's called life

Tim - it will come and bite all of us. We get into big numbers here. The shift is so massive, that tying to tackle it in moral terms only would not work.

When you are among dressed up people, and suddenly one comes out naked, everyone is stunned. It is so appalling. When people were forced to undress before going to nazi gas chambers, being naked was not a big concern

Cathy McAlister - thank you for a fascinating comment. I learned so much from it. I came to US in 1991, and for quite a few years was working pretty much 24/7 sleeping between the jobs or on the jobs, if it was slow. I was not much of a participant or pupil to any of that. You added that perspective, that helps better understand today.

A very thoughtful comment on my wild guesses.

Thank you

Missy - why are you and Lenn seeing religion when the word "moral" is spelled? As I already said, I considered myself quite OK with morals, and I have not affiliation with any religion. I am so dumb when it comes to religion, that only my communist upbringing in an atheist country could result in it.

As for the nation of laws, if htere are no moral support for the law, there is no law. The rest is just words.

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