“Someone please tell me I’m not the only one on this board who would have a problem breaking a contract like that. If you make an agreement with someone, you have an obligation to see it through. Even if the agreement is with a bank, and even if it costs you money.”
I actually don’t see a moral problem here. A mortgage is an asset-backed loan, that is, a loan guaranteed by physical property. The borrower can walk, and in that case the lender takes ownership of the property. Both sides know that (the lender certainly does), and that’s why mortgage rates are higher than risk-free Treasuries. Same for corporate bonds, and any other kind of loans. Default is always a possibility, and the lender compensates for that risk by a higher rate. It’s totally fair game, in my opinion.
That being said, I’m a very pro-business kind of guy, and totally agree with the bankruptcy reform last year. Before that, it was so easy to walk from debts, it was almost an invitation to default.
