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Walking away: Moral, Ethical, Just Business?

By
Real Estate Appraiser with AmcAppraisalsinc.com

This is a great video from CBS' 60 Minutes about the growing trend of people walking away from their home and mortgage, even though they can afford to stay - meaning they have enough income to stay.


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A couple of things which caught my eye about this video, is the struggle of conscience people have and the steps they must take within themselves to embrace the "it's just a business decision" stance.

I myself struggle with the tension between personal responsibility for choices made in a market and contract situation and the business decisions to cut the losses and move forward. 

I know as an appraiser, I am seeing these 50% drops in value from the last purchase in 2006 and 2007!  Even if you CAN afford to pay the payments, every payment made I imagine would be a stinging reminder of that value loss!  

I also noted WHERE the majority of walk aways were occurring:

Walk away trends

Interesting to see FLORIDA as the greatest saturation of this trend!

Yet the lure of easy money in 2005-2006 and the idea of living within an hour's drive of either coast - sure made it easy for many to move, purchase, flip, get 2nd homes, etc, etc.

The question of WHEN this market will finally even out is still up in the air!

I recently noted many 'stable' conditions in my local markets where it would appear that the pricing has 'bottomed out'.

However, as more and more inventory continues to outpace sales, it makes me concerned we are ready for another drop down, especially if lenders make it difficult for new buyers to obtain financing!

So what do you think?  If you CAN afford the payments, but are just so mad at your loss of value - is walking away a moral issue?  Or is it just a business transaction?

And just because 'everyone else is doing it'....does that make it right?

I withhold judgment on this one as I certainly can see cases made for BOTH sides of this coin!

My hope is for rapid recovery for our markets, our nation, and our citizen's financial situations!

Comments (6)

Shanna Hall
Real Estate Solutions - Kirkwood, MO
I love selling houses!!!St. Louis, MO 314-703-1311

It surprises me that people fell like they had nothing to do with the purchase of their  home...  America is breeding a nation of people that take little to no responsibility for themselves...  Which is just making the funnel worse...  It will be the demise of our country...

May 12, 2010 03:03 AM
Richard D. Ferris
AmcAppraisalsinc.com - Clermont, FL
Florida State Certified (FHA) Appraiser

It is interesting to watch the differences in generations/age on this issue too!  I have been reading alot of conversations about this CBS video - and it is very interesting to see how the older generation (45 years old and up) have a stonger reation to the moral/ethical side of this and the younger (35 and under) age group land on the business decision side.

Thanks for the comment Shanna!  It does make me wonder about the future of our still very young country and the future leaders of America.  Does moral relativism make for stong national leaders?  I think this issue can bring a lot of deeper issues to light.

May 12, 2010 03:06 AM
Shanna Hall
Real Estate Solutions - Kirkwood, MO
I love selling houses!!!St. Louis, MO 314-703-1311

Richard- I flagged this- hopefully you will aget a front page on this one!  I think it will lead into some really good debates!

May 12, 2010 03:40 AM
Shanna Hall
Real Estate Solutions - Kirkwood, MO
I love selling houses!!!St. Louis, MO 314-703-1311

BTW- I am 36...  I guess your break down of the ages is accurate;)

May 12, 2010 03:41 AM
Richard D. Ferris
AmcAppraisalsinc.com - Clermont, FL
Florida State Certified (FHA) Appraiser

Thanks Shanna!  I am turning 40 - so I find myself on the grey area on this!  I don't take the "well the banks can do it why not me?!" approach....but I also can see the logical side of the 'business decision' for this!

But - I would likely fall into the category of stickin' it out for conscience sake if I could afford it.  It is a WHOLE OTHER story for folks who cannot afford the payments due to job loss, etc.  But the real deal is for people with the income to afford it.  How has the situation changed....except they think that it sucks sinking money into a losing 'investment' ? 

The difference with a bad investment in the stock market is that there are no contracts to keep you in place.  You can dump the stock and take the loss.  But with a mortgage, there is the agreement, contract etc.  And then you have the impact on the market and surrounding neighbors, etc.  There  is the whole "agreement to pay" thing too!  Ugghhh...tough topic!

May 12, 2010 03:50 AM
Shanna Hall
Real Estate Solutions - Kirkwood, MO
I love selling houses!!!St. Louis, MO 314-703-1311

I don't think people understand what they are doing to thierh neighbors and the economy- if they would hold tight for a while and take responsibily for thier actions- the economy would self correct!  It is kind of like wehn everyone ran to the banks to get thier money out - the was no money to get... hence the Crash!

May 12, 2010 04:18 AM