A Mortgage Is Not A Moral Contract
February 10, 2010
Let me repeat. A Mortgage is not a moral contract. It is a legal document between two parties spelling out obligations between them. There is nothing moral in this nor moral and morality has any room to wiggle its way in this agreement. If, during the course of the existence of this document, it turns out that it makes more economic sense for one party to breach the contract, then breach it. If it makes more sense to just walk away from a home you are struggling to pay mortgage on and the mortgage is for more than the house is worth, consider walking away. No Moral dilemma here. This is simply an economic/legal consideration.
The homeowner relief plan adopted by President Obama and Treasury Secretary Timothy Geithner has not been working for a full year now. What’s worse, as the program is currently structured, its chief benefits accrue directly to the nation’s largest banks, leaving troubled borrowers to twist in the wind. But despite the administration’s indifference, underwater borrowers can still take matters into their own hands. If you owe more than your house is worth, just walk away.