This was originally posted at the AWEARNESS blog.
There is a reported rise in people simply walking away from their mortgages. To me, that's pretty darn scary. And what's more, considering that the Obama-backed refinancing program isn't all it's chalked up to be, I can picture more people doing this. And why shouldn't they? Businesses do it without much repercussion. Well, the big stick in this picture is our credit history. Walk away from your mortgage and who knows what the future has for you?
The credit risk is high and akin to smashing a mirror on purpose -- back out of a mortgage and get yourself seven years of bad credit. There's also the theory that by walking away from your dream home that is underwater, you start to sink your neighbor's dream as well. That's a lot of guilt to manage.
On a recent NPR segment, a caller named Bill said he thought that paying one's mortgage was the morally correct thing to do. Brent White, law professor from the University of Arizona, responded, "I think this works to the advantage of lenders who actually understand that a contract is not a moral document, it's a legal document."
What I don't understand is how an abandoned business doesn't impact the value of my home, but a foreclosed condo does. The inequality in the economic landscape between businesses and individuals continues to grow and grow... At least in our awareness of the inequality anyway.