Strategic default on mortgages: most Americans don’t approve

But I think most Americans are wrong. I was taught to never welch on my debts and I know my father, had he taken out a mortgage (he never did) would have paid it off regardless of the value of his house compared to his debt, but that was then, this is now.

I think Tim Cavanaugh, whom I link to above, has the right take on this:

The question shouldn’t be whether strategic default is acceptable but whether 300 million innocent people should be made to pay nearly a trillion dollars to keep bad borrowers and stupid bankers from enduring the consequences of their own decision. And based on the evidence visible in polls, election results and street theater since 2008, most Americans find that unacceptable. But maybe that just makes them devoted libertarians who are so disengaged from political reality that they don’t want a hunky strongman president to save the economy from a total financial meltdown.

Clear these houses out, reset the board, and let’s move on.

3 Comments

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3 responses to “Strategic default on mortgages: most Americans don’t approve

  1. shoeless

    They need to break down that number into three groups:

    1) Those that have a mortgage
    2) Those that have paid off their mortgage
    3) Those who rent

    I think you’ll find that #2 and #3 are the most likely to stigmatize jingle mail. If that’s the case, then the number of folks in group #1 that think it’s ok might be the majority, and they are the only folks who really matter in this equation.

  2. Old School Grump

    Hard to believe no one has made a comment here thus far. Maybe they’ve all come round to the same conclusion as CF. I know that I have, although it took awhile.

    A mortgage is a business contract, pure and simple. Lenders are not subject to twinges of guilt; they do not fret about the moral dimension of their commitments; the word “shame” is not in their vocabulary. Borrowers are entitled to play by the same rules, regardless of the reasons for their defaults.

    PS, I’m not talking my own self-interest here. I’m one of those boring people who bought a house they could afford, made a big downpayment, and resisted the temptation to “tap into home equity.” That doesn’t make me Saint Wonderful, but it makes me pretty pissed off about being forced onto the Taxpayer Janitorial Squad to clean up other people’s messes.

  3. out looking in

    Cavanaugh is an idiot. WE ARE THE BANK! And savers are enduring a hellacious penalty already by receiving zero interest on very short term deposits…to BAIL OUT THE BANKS THAT PAID THEMSELVES (and still do) 10s BILLIONS A YEAR with profits from THE CARRY TRADE. Now, all things equal, our taxes willbe raised to finance the costs of the strategic defaulters. Hey, if they want to go to bankruptcy court and forfeit their assets- fine, let them walk. No scarlet letter necessary (at least visible).
    I’m with Old School on this one….