No, I think that borrowers who walk away from properties for which they can continue to make payments are risking a lifelong “deadbeat” reputation that not only will make it impossible for them to gain credit, but also bar them from security clearances, attractive employment offers, and other opportunities. To paraphrase Captain Renault in Casablanca: “I’m afraid that the bankers will insist”.
Note that I am not commenting on the decision to stay or walk away. As made very evident on this thread, that’s a very personal choice based on individual viewpoint. But the thought of what the extremely powerful lending community will do to those who do walk scares the hell out of me. And anyone who thinks that the government will step in and prevent them from taking draconian measures need only look at congressional and agency response to banking missteps over the past 25 years.[/quote]
Well, they are already trying to penalize “strategic defaulters” and some in congress are trying to stop it, thankfully.
Also, remember they are only a “deadbeats” if they are of modest means, if they are well-to-do or a corporation, it’s just practicing sound financial judgement. Of course, the well-to-do default at higher rates than others.
The current housing bust should be viewed for what it is: a systemic market failure – not a moral failure on the part of millions of American homeowners.
In fact, I’d go as far as to say, that “strategically defaulting” is the moral choice rather than propping up massive systemic fraud.
The big banks are not just amoral but immoral. We need a restored morality, which must grow again from the ground up. We won’t find remnants of it in existing structures. Paradoxically, strategically defaulting is a step in the right direction to restore morality.
Geithner helps the big banks unload all the risk and bad bets on the people and then he turns around and threatens the people from walking. That is the definition of “GALL” and will blow up in his weaselly face.
