It continues to amaze me that people get all worked up when people make the very logical, very legal choice to walk away from houses they’re upside down of. They made no agreement not to do that and to act like they have some kind of moral obligation to the bank to make a stupid financial decision is just silly.
I wouldn’t get worked up if it were just private parties involved. But, in this case, the Federal Reserve loaned money (taxpayer funds) to the banks who in turn gave that money to borrowers through 100% no-doc no-income-needed loans. These loans were then packaged up and sold to government pension funds. Thus, it now looks like we are on the brink of a massive taxpayer-funded bailout.
If this were just some hedge fund giving money to home buyers with no income and the resultant mortgage were securitized and sold to some other hedge fund … well it’s likely no one would care. As it is, people tend to get a little PO’d when they think about their tax dollars going to fund some couple’s speculative home buying.
I’m actually on the fence about this. I know that walking away is the correct business decision for borrowers, but it steams me a bit to think that I will have to pay for it.
