I would be more inclined to call it stupidity as opposed to honor, Kelly. Our astute “investor” (characterizing a property that is negative cash flow from the get-go an “income” property is our first sign of who we are dealing with) throws down the morality card we have debated here for months. My advice to this person, having already acknowledged that they have made a bad business decision, is to start thinking long and hard about whether their priorities should rest with some over-reaching sense of obligation to their neighborhood as opposed to their own family.
Yes indeed, there is great “honor” in sinking increasing amounts of money into a bad investment while neglecting your childrens’ educational funds. That makes tremendous sense. Perhaps the children don’t even really need higher education, thus increasing the likelihood that they will perpetuate their parents’ fine investment decisions. Fantastic idea. After all, we don’t want to cause any problems for next door neighbor Bob’s refi or ruffle any feathers in the neighborhood.
This person’s circumstances are affected by the fact that the distressed property is, ahem, “income” property, which has certain legal implications relating to…walkability. Speaking more in generalities, then, I suggest that anyone who can walk with nothing but a damaged credit report must consider doing so if the alternative is financial ruin. Anyone who steers their own bus, family aboard, over the cliff when there is a way out is arguably an idiot.
And what of those, you ask, who do not face financial ruin but instead would like to shave a few hundred grand off their mortgage balance? I can hear the morality drumbeats grow louder on this one, but I’m not inclined to cast stones regarding someone’s business decision pursuant to a contract that if at all typical has provisions on point. Now will there be a macroeconomic effect of decisions to walk? Yes. Will I be affected in some way? Probably. But it’s certainly naive to believe that we have not been affected by the decisions of our fellow man/consumer/borrower/insured/etc over the span of time. This is no different.
