n_s_r – I generally agree with all of your points. A borrower needs to account for ARM resets if/when agreeing to the loan. It may have been irresponsible in this case. If he made 200K when purchasing, but now makes 40K, it may be a combinaiton of factors, not just irresponsibility. It may include a combination of lack of foresight, low intelligence, irresponsibility and bad luck.
The banks do have a fiduciary responsibility to “devine” the future via assessing their risks for loans they are originating and/or purchasing.
Having formerly been in debt to the tune of about 35K when I finished school, I believe in taking personal responsibility for my affairs and think others should do the same. I spent a few years climbing out of my own personal hole and I believe that I am better off now having done so.
However, it is easy to be noble in the abstract without having to walk in this man’s shoes. You may think that the noble thing for him would be to try to scratch by, draw down his cash and maybe take on some room-mates, so that he can go broke at age 55-60, rather than taking his lumps now and trying to recover financially before it’s too late to recover.
Perhaps if he chooses the trying to scratch by path he actually becomes more of a burden to society in the long run.
Consider this. The US debt currently amounts to $29,354 per man/woman and child in this country.
The noble thing to do financially would be for each of us to send a check to the Internal Revenue Service for about 30K for ourselves and each of our dependents. The law does not require this, but maybe it is the right thing to do.
