|
|||||
|
Home About Us Advertise Here Articles Blog Unique Boomer Gifts Contact Us Classified Ads News Press Releases |
|||||
|
Reduce Automobile CostsHelpful BooksFREE Classified AdsAffordable Dental InsuranceDating & EntertainmentCut Your Food BillsBoomer Health, Beauty, Fitness & AgingShopping Health InsuranceStart a Home-Based BusinessCut Household ExpensesLow-Cost HousingLife Insurance StrategyMLM OpportunitiesBaby Boomer NewsParental Care IssuesFREE Real EstateAssistanceRelocate to a LowerCost of Living AreaBaby Boomer ResourcesRetire AbroadManaging yourRetirement SavingsSocial Securityand Baby BoomersInexpensive TravelUpside-Down Mortgage?VA BenefitsVision Care on a BudgetVolunteeringWork Part-Time |
|
||||
|
year that was one of the first to seriously challenge the long-held view that borrowers have a moral obligation to continue making their mortgage payments. He says he’s been inundated with thousands of emails from people that showed him “the real texture of what’s going on—what difficult times people are having, and how people really do struggle with these decisions.”
Mr.
White tells readers that he hasn’t set out to recommend any
particular course of action. Borrowers need to factor in
their personal situation, and the laws in their state. “The
bottom line is, people need to make their own call,” he says
in an interview. He adds that he wrote the book because he
realized “they may need help about how to think about it.” Too much information about walking away from mortgages “is intended to scare homeowners,” he says. His advice to borrowers wrestling with the decision: “Make sure you’re staying in your house because you decide it's |
|
worth to you, and not because you’re worried about
things that are probably not going to happen.” These views, and
others, are likely to give heartburn to mortgage investors and
lenders.
The book falls roughly into two parts. The second half walks
borrowers through the different options available depending on their
situation. The first half gets there by evaluating three
considerations: financial concerns, practical ones and moral
dimensions.
On the first two, Mr. White urges readers to answer a series of
questions to decide whether walking away makes financial and
practical sense. Can your bank pursue your assets? How much of a hit
will your credit score take? How much will you save, if anything, if
you rent? The book also includes a handful of worksheets to
calculate these and other costs.
But it’s on the moral question where Mr. White has penned a polemic
against the lending industry’s arguments against walking away.
Financial institutions and the government, he writes, “have acted to
make sure that underwater homeowners and not lenders bear the
primary burden of the housing collapse.” (Left unsaid is that
taxpayers, too, could bear the costs of mistakes made by lenders,
Fannie, Freddie, the government, and homeowners that walk away.)
Mr. White says there’s lots of blame to go around, and that “a
little of it” belongs on homeowners. But he says that underwater
borrowers have paid a far higher price than lenders or the
government, which are more responsible for the bust. So should
borrowers feel badly about defaulting?
Your lender knew the bargain that it was making when it loaned you
the money, including that it was loaning money on a home with a
possibly inflated price. It also knew that you might default if
prices crashed.…
If your lender miscalculated the risk of defaults due to a housing
collapse, that‘s not your fault. You aren‘t barred from collecting
on an insurance policy if your insurance company miscalculates the
chances of a tornado and wishes that they had charged you more. If
your lender miscalculated the risk of a housing collapse and
borrowers defaulting as a result, that‘s the lender‘s error. It will
be more careful next time. But you still have an option to default.
Under what circumstances, then, is it reasonable to walk away?
I think it‘s OK to stop paying the mortgage long before you clean
out your savings, sacrifice your retirement, spend your children‘s
college fund, and certainly before you have to start using your
credit cards to survive. Before you do any of those things, I think
the more moral course is to stop paying your mortgage. Indeed, I
think it‘s morally acceptable to default if your mortgage threatens
your ability to save adequately for the future, regardless of
whether you can pay it according to some arbitrary definition of
“affordability.” It may be more responsible to put the money saved
from giving up your home and renting instead into an investment
account, so that you are secure in retirement. Or put it into a
college fund, so that you can give your children a chance at a
higher education.
In other words, things aren‘t so black-and-white. Given the
unprecedented nature of the housing collapse, it should at least be
possible for reasonable people to disagree about the most moral or
responsible course of action for underwater homeowners. No one is
entitled to sit in judgment of you.
Bookmark This Site Forward Site to a Friend Disclaimer Privacy Policy Boomer Links Sitemap This Website
Copyright 2008-2010 by Pacifica Endeavors LLC. All Rights Reserved.
