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The value of our family's home, bought at the peak of housing prices two years ago, has declined so much that we've lost all our equity, and it's now worth less than the mortgage. But the fixed-rate monthly payment hasn't changed, and we can comfortably afford it.
My husband says it would be smart to default on the loan, give the lender our house and buy a similar house for much less. "Everyone's doing it," he says. I think this is unethical. What do you think?
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I agree with you. Your mortgage agreement is a binding contract that you and your husband should honor, especially because you were not tricked by an unscrupulous mortgage broker (as many subprime borrowers were) and you can still afford your monthly payments. Surrendering a home in foreclosure should be the last resort for truly desperate homeowners.
Consider two other things: First, you won't easily get another mortgage if you walk out on this one. Second, the value of your home will eventually resume its ascent.
Politics in the workplace
Our industry has a political action committee that supports candidates who are hospitable to its interests. But I disagree with these politicians on many other issues. My boss is leaning on me and other executives to donate the maximum amount and I'm afraid to turn her down. What do you suggest?
It is unethical for your boss to pressure anyone to contribute to a PAC (or any other of her pet causes, for that matter). Try to put her off with a noncommittal response, such as "I'll give it close consideration," and if she persists, courteously explain your reservations. Or, you might consider making a token contribution to keep the peace.
In any event, tell your company's human-resources staff about the pressure, and they should make it clear to all that PAC donations are totally voluntary.
POSTED BY: Carl (July 30, 2008 03:44 PM)
Well I guess I don't know all the details about walking away from a home, but I can tell you there appears to be almost no ramifications. I live in Michigan. My neighbors walked away from their house and bought a brand new house down south. Now they are in the process of putting in a new inground swimming pool. Yeah their house in Michigan evenutally sold in foreclosure for $97,000 less than originally paid for. Again, I don't know the legal system, but if having this black mark on your credit report allows you to buy a new home, put in a swimming pool, and all the while not having to pay the mortgage company the difference of the original loan and the foreclosed sale price, I think I'd consider going for the bad credit.
POSTED BY: HI (July 31, 2008 05:14 AM)
Yes, like BS, I'm mad as hell about the whole sub-prime loan mess. It's a national crime and like sex offenders, they should publicize the names of all those borrowers, loan officers and mortgage brokers for everyone to see. I mention both parties because it take two to enter into any kind of contract agreement. Shame on the borrower who over extended themselves and for that, they should never live on credit again. They can live paycheck to paycheck. If they don't have the cash they can't buy it. Since we all know, they're not going to make payments. The loan offier / mortgage company who approved the loan just to make a commission should be banned or have their license permanatly revoked from doing any kind of financial business. They obviously lack ethical business practices which proved costly not just here in the U.S. but world wide. Both parties are not responsible and we cannot and should not bank on them in the future. I think it's a fair way for them to repay the rest of us hard working and responsible Americans for bailing them out.
POSTED BY: ethics please (August 17, 2008 09:47 PM)
The sub-prime evil lenders and people like these are the reason for the whole mess (in) the real estate market is a mess. I decided about 4 years i decided i wanted (kind of needed) a bigger house to start a family. I made a plan...I worked hard and was promoted twice at my job..I cut spending and havent taken a vaction anywhere in 5 years. I use my vactions to spend that week to work at the small home i am in. and now that i am able to move i can't, my whole neighborhood is for sale. 75% of the house on the list are foreclosures and the other % are people wanting to leave the hood before it gets worse... i am a man of pride (and) somewhat good ethics, i realize i made a choice and it didnt work out. now i live in a bad neighborhood that is getting worse and home price keeps falling...and i have to pay for it? my 4 year plan is now a 10 year plan. my dream of a bigger home is gone for now...yes i can walk away like these people, buy bigger home and install a pool, but i have pride and cant live with the feeling that some hardworking person living within his means, like me, will have to pay for my greed and ignorance.
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