I would argue that to stop paying while continuing to live in the home is unethical. It’s trying to play both sides. Breaking the contract but still reaping the benefits (occupation of the house.)
I believe that there is plenty of blame and pain to share among the parties to the contract – borrower loses downpayment and takes credit hit. Lender takes hit to investment and has costs associated with reselling the property. But if the person doesn’t vacate and chooses to not pay – in some ways, that’s theft. It’s kind of like “dining and dashing”. They are reaping the benefits without the costs.[/quote]
Good point UCGal.
The only caveat I would add is that IF the borrower offers a deed in lieu, and lender rejects it (which almost ALWAYS happens), then the onus is shifted back to the lender. If no deed is offered, and the borrower just stays and waits for a foreclosure sale, I agree entirely.
