With millions of Americans still underwater on their mortgages, I wonder why more people don't just walk away from them. Maybe some do, but many more are working their butts off to make the payments on a house that, if sold, would fetch about four-fifths of what's owed. In Minnesota, where there is a 6-month "redemption period" after the foreclosure sale (assuming the house isn't vacant), you could save a full year's rent money, then let the mortgage holder have the property. You get a new place that rents for less than the mortgage payment had been. The bank or its successor in interest gets the underwater view. What's not to like?
The answer to this question, according to Scott Johnson of the wing-nut Power Line blog, has to do with Socrates, who just before swallowing the poison instructed his friend Crito to pay to Asclepius the rooster he (Socrates) owed him. But perhaps we are more bound by debts to our friends than those to a lender who hopes to profit from our need for housing by immediately selling the mortgage to Wall Street, where it is "pooled" and "securitized" and sold to investors who hope to profit even more.
Usually the right-wing worships the free market. The idea is that everyone acting in accord with their private interest results in a paradise here on earth. If that were true, it would follow that borrowers should walk away from upside down home mortgages. The lender traded the loan amount for a security interest in the property. But it turns out that the security to which the lender agreed was inadequate. The property is worth only a fraction of the amount advanced. The borrower should exercise her prerogative to allow the lender to take the remedy prescribed by law while she moves on. Every circumstance is different but the decision about whether to walk or not seems to me like it's often easy.
I guess there is a kind of moral taint associated with "not paying your bills." Johnson, who is a lawyer for TCF Bank, tries to make the most of that. It just shows, however, the degree to which the culture has been taken over by corporate interests. The attitude of the big banks is, "We'll do what's best for our bottom line. And you should do what's best for our bottom line, too. And, if it doesn't work out for us, you bail us out." Talk about moral taint!
The degree to which the general population is happy to play along at this game is striking.
