-----Original Message----- From: brin-l-boun...@mccmedia.com [mailto:brin-l-boun...@mccmedia.com] On Behalf Of John Williams Sent: Thursday, October 21, 2010 3:34 PM To: Killer Bs (David Brin et al) Discussion Subject: Re: Loan modifications (was Re: Starting Engineer's Salaries)
On Thu, Oct 21, 2010 at 1:00 PM, Chris Frandsen <lear...@mac.com> wrote: > > On Oct 21, 2010, at 2:02 PM, John Williams wrote: > >> But since you want to modify an agreement in your favor, you more or >> less need to jump through their hoops, even if they are ridiculous. > > John, do you believe in negotiation/ old fashion bargaining? Yes. I wrote "if you want to modfiy the agreement". I do not consider stopping payments and leaving the house as modifying the agreement. > Part of the initial contract, I am sure, was a very clear discussion > of the grounds for foreclosure which go into effect when you decide > not "to jump through their hoops". As it is part of the contract, I do > not think it is dishonorable for one party or the other to cause the > clause to be implemented. Note that in many states, it is the law that mortgages are nonrecourse, meaning that the lender cannot pursue the borrow to recover the debt. >If I understand you, then you are saying that since the mortgage >specified what happens when the borrower defaults on repayment >(foreclosure), and since it is a nonrecourse loan, then it is okay for >the borrower to make a strategic default. Legally, of course, that is >true. >But morally, choosing to not repay the money is not okay. If I borrow >money, then I am giving my word that I will do everything within my >power to pay it back. It is that simple. If I am paying for insurance for the lender in case I don't pay it back, why is it immoral to accept the penalty for not paying it back, knowing that I prepaid insurance for the lender. >I may know that the penalty for stealing a car is X years in jail, >then if I steal a car and serve my time, I have still done >something dishonorable. Com on John....you say I stretch things? How many car owners get the thief to pay for theft insurance? That's what a premium over T-bills is; default insurance. I agree that walking away just because it's profitable is dishonorable. One should make every reasonable attempt to pay one's bills. But, if both parties sign a legal agreement, then the bank did it with it's eyes open, and if the house is under water and the payments will bankrupt someone, mailing in the keys is a reasonable option. _Both parties_ agreed to it, so it's a free agreement the bank entered into to accept the house if the owner feels that it's in there best interest to mail in the keys. Again, I understand how strategic retreats in a debate can be difficult. But, none of us have perfect understanding. You really do have an interesting take on things. I appreciate the fact that your viewpoint doesn't fit into one of the stereotype dittohead viewpoints that I hear too often. You have much to offer in a discussion between reasonable people. But, in this case, you have not made a strong argument....just a black and white one. I agree with you that one has a moral obligation to make every reasonable effort to pay a mortgage....that's the spirit of the law. The objectivist I mentioned who made money at the taxpayer's expense by allowing a foreclosure when he could easily pay the loan and when the house would probably bounce back to more than his buying price (it actually did...but at the time one could only give a high probability to it happening) acted dishonorably IMHO, even though he followed the letter of the law. He broke the spirit of the agreement. But, someone who is floundering under water and mails in the keys because they see no other way out....or uses the leverage of that to get the bank to keep an agreement it made....is not honor bound to do everything conceivable to pay the mortgage. They already paid an agreed upon fee to insure the banks risk. If it wasn't sufficient, it's the banks mistake. They signed the agreement and are bound by it...both legally and morally. Dan M. _______________________________________________ http://box535.bluehost.com/mailman/listinfo/brin-l_mccmedia.com
