In the late 1990s country music star, Trisha Yearwood, had a hit song titled Walkaway Joe. The title of that song would be an apt description of many borrowers today. These people invested in real estate by leveraging themselves as much as possible. Many of them bought homes with little or no money down.
The softening of real estate prices has left many of these investors owing significantly more than the house is worth. A lot of people decide to walk away from the homes rather than fulfill the obligation that they signed for. They make a business decision based strictly on dollars and cents rather than feeling any moral obligation to repay the loan.
There will always be people that are blindsided by some catastrophe in life that sends them into foreclosure. Perhaps a job loss or medical crisis has impaired their ability to repay. I hope these individuals find a way to get back on their feet and find a way to get on with their lives. They are not the problem.
Born to Be a Leaver…
The foreclosure crisis has resulted in a blitz of advertisements from bankruptcy lawyers and others looking to capitalize on this mess. The media has portrayed those who are walking away from their homes as victims. While unscrupulous lenders, real estate agents and others may have preyed upon some of them, most of them are victims of nothing more than their own greed. They should have known better. Now they are being told that it is okay, or that the government will bail them out.
One company that has sprung up is You Walk Away, LLC, located in San Diego. Their Website states that they can help you live in the home for as long as 12 months without making payments or being hounded by creditors. What happened to personal responsibility and the stigma of defaulting on a large debt? Insanity.
Destined to Deceive…
It’s not just the small time investors who are abandoning their obligations. Just last week on the TV show, Inside Edition, former baseball star Jose Canseco made a stunning admission. He stated that he stopped making payments on his $2.5 million mortgage and is letting the house go into foreclosure. According to Canseco, “It didn’t make financial sense for me to keep paying a mortgage on a home that was basically owned by someone else.” In essence he just decided that he didn’t want to pay anymore.
Guess who pays for all of this? The irresponsible borrower gets a break while the responsible one gets nothing. We all pay in the end. We now have a situation where lenders don’t want to provide loans to qualified borrowers. Can you really blame the lenders? If the consequences of not living up to your obligations are so minimal how can they trust anyone?
We’ve become a nation of victims. It seems so few people have any sense of personal accountability. It’s like the four-year-old kid with cookie crumbs all over his face who claims that someone else raided the cookie jar.
Everybody wants to take responsibility when you win, but when you fail,all these fingers are pointing. –Mike Krzyzewski Duke University