[quote=patientrenter]We will have to agree to disagree, analyst. If I borrow $500,000 from you, then I owe you $500,000. The fact that I choose to use that $500,000 to pay far too much for a shack, or throw it down a well, or plough it into my business, or whatever… is irrelevant in my eyes.[/quote]

Lawmakers in non-recourse jurisdictions observed that sellers, lenders, appraisers, and the real estate sales force, repeatedly, over long periods of time, induced less sophisticated buyer-borrowers to buy homes at inflated prices.

To curtail this practice, the lawmakers passed laws that charged the lenders with responsibility for insuring that the sale (collateral) value of the home would always be equal to or greater than the loan balance. They did this by specifying that the lender could take the home from a defaulting borrower, but could not make a claim against other money or assets of the borrower.

If you borrowed $500,000 from me because I conspired with sellers, appraisers, and real estate salesmen to create the artificial appearance that the home you were looking at was worth $500,000, when all the conspirators knew that it was not, and the home was in a jurisdiction where the lawmakers had decreed that the actual value of the home was the upper limit of your liability, it is clear that you do not owe me $500,000. You owe me the home.

Further, based on the bad acts of the other parties, it is clear that there would not be anything unethical about your decision to resolve the matter by turning the property over to me.