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To Pay Or Not To Pay...Why Are We Angry?

The discussion about walking away from paying what we promised to pay did not leave us indifferent, absolutely not.

I think there is some unity in treating it the way that if you can pay, you have to pay, but if you can't pay, than family is more important, and you can walk away from the financial obligations. If this was business only, take the calculator, but than it does not matter whether you can or can't pay. It is what your calculator tells you.

And if we agree to use calculator in one scenario, but not in another, then this is a moral issue as well. Not only business.

OK, so we think that people should be making payments for their real estate if they CAN AFFORD PAYMENTS. What if they can afford, but decide to walk away? Does this makes them look bad?

What if they work more than one job and more than the one who can't pay? Maybe they were less adventurous that the ones who can't pay?

They are both upside down, their real estate is not going to worth what they owe for quite some time, it is draining their resources, but we would forgive those who said they can't pay, and we would be angry with those who still can...

So, if someone, who did not play it safe at all, will get a free ride, and someone who was more diligent, acted more responsibly, wouldn't?

Can it be that we want to punish a prudent person simply because he/she is a prudent person? They both made the same promise to repay. Some say that they have to keep paying if they can, because if they stop, we will have to collectively pay for them. Yes, but we will have to collecively pay for those who stopped paying, too.

So, if for a moment we forget about the banks, the government, and the recession, and just think about those who can't pay and those who can ... are we fair?

So many members agreed with Lenn's comment (#3) Show Me The Soul..., when she suggested that we take morals away, and that this is a business decision.

Then why are we angry?

Posted by Jon Zolsky, your Daytona Beach, Florida connection on 07/11/2009 11:08 PM

Comments (11)

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Originally posted at: Jon's Blog: To Pay Or Not To Pay...Why Are We Angry?

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11 Comments on To Pay Or Not To Pay...Why Are We Angry?

JUL

Because it is the mortgage industry that created the problem.

Just push the loan through and fudge the scenario a bit, so they can get that commission.

Once again, greed is the root of the problem.

All that needed to be done was make sure that loans are given to those who are truly and verifiably qualified.

You can't blame it on the homeowners.

Yet's just go as far as say someone lied about their income.

If you're going to be making a commission on a loan, and since it is the largest purchase someone will be making in their life, it is CRUCIAL AND IMPERATIVE that you have a verification system in place that is fool-proof, and make sure those lenders are kept in check themselves.

Ralph - I do not really like the idea of singling out one industry, and claim them greedy and immoral. Why suddenly the mortgage industry succumbed to greed and they did not do it, let's say, fro 1990 to 1992, or any other period for that sake?

Greed is what makes capitalism, and it is the engine behind the best things in this world as well as the worst things in the world.

But if you take greed away, you get a socialist system, where "they pretend that they pay us, and we pretend that we work".

People lied before and there are ways to verify whatever you want. However, when the government (Bill Clinton) pushed the industry to start giving loan to those, who the lenders usually were not giving the loans to, that's when it started.

JUL

Jon,

There were thousands and thousands of people who had no business being in homes. This was done by neglidence and/or fraud. I won't opine-it pisses me off.

I do NOT believe that it was only the mortgage industry that created this mortgage mess. I saw many, many instances of investor buyers come into the DFW market from out of state... and snarf up spec homes... five homes and ten homes at a time. It was NOT the simply the mortgage companies... but a whole collection of folks trying to make a killing by taking advantage of what they thought were going to be rapid increases in value.

But... back to the question. If an owner CAN scrape by and actually make the payment, but sees that doing so will put everything else they have... including their family, in danger... then phooey. Quit making the payments, and make the best of it from then on. Survival is key.

Jon: Great idea. Blame Clinton. Sorry, Jon, but for most of the years he was in office, the Republicans controlled both the House and Senate. In many ways, his hands were tied. Well... they were tied in many ways... except when Monica came to visit... LOL.

And... I think your definition of the "socialist system" is great. Best I've heard. Socialism... where "they pretend that they pay us, and we pretend that we work." I need to remember that.

Jon: I'm not angry and I don't want to punish anyone. I'm not concerned about people not being able to pay. The economy is a construct, a shared system of beliefs and assumptions. People not being able to pay is just part of the makeup of the system.

It wasn't JUST loan officers lying about borrower income. It was lenders lying to the secondary market. It was about the syndicators lying to the insurers. It was the Congress (both parties) and two presidents pressuring the lending industry to broaden home ownership. It was the REALTORS and home builders telling the politicians to do it.

It was the baby boomers telling their kids it was okay to expect to have at 30 what there parents had at 50.

It was all of US.

Ask someone from another country who caused the world economy to stumble. They will tell you in no uncertain terms.

We have met the enemy. And they are US.

Terry - Of course there were thousands and thousand of those, but they did not fall from the blue sky. We opened the floodgates by pressuring the Lending industry to provide financing to more than risky borrowers. ANd when the financing became readily available to anyone, who could hold a pen in their hand, the flood started.

Now we are all pissed off, just singling out those who have savings or just happen to be still able to pay is not fair in my opinion. Why we need them to get to the point when they finally can't pay, and then they will be justified in our eyes? They might be better off just walking away now and have better chance of getting back on their feet sooner and with less frustration, or even depression, which often follows.

Karen Anne - Neither do I. i do not believe in sudden instances of industry-wide spasms of greed. There is always something behind it. We just need to look further.

Not that I am ecstatic about Geroge Bush, but as far as I understand that started with Clinton. I must say you made me laugh with your Clinton comment, just very funny, indeed.

As for the definition of Socialism, it is not scientific, but true. This prase was a popular joke among the Russians.

JUL

Matt - you are absolutely correct, and you put it very well. Looks like this one will change the way companies calculate risks, though

Jim - Terrific points. You also added one that I was missing and did not think about: baby boomers telling their kids that it is OK to expect at 30 what their parents had at 50.

Unforunately not all of us understand that we are not the only good ones whatching the rest of bad ones. It is ridiculous that real estate professinals can jump on mortgage brokers accusing them, when we bare pretty much the same responsibility.

They look in the mirror but still think that they are looking at somebody else, not them.

Thank you

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