We're back. At least until we decide to take another excessive holiday sabbatical, and by 'excessive holiday sabbatical' I mean from the beginning of November until after the New Year.
Surely you're wondering what could possibly be so interesting as to drive Murphy out of his/her spiderhole and return to posting. The answer lies in a New York Times article discussing the increasingly popular practice of voluntarily walking away from an underwater mortgage, also known as strategic default. In the article, the author points out how individuals are treated differently than institutions when abandoning a crummy investment.
Whereas an institution defaulting on a bad investment is viewed purely as a reflection of profit-based decision-making, the homeowner is still subject to a stigma if he/she walks away from a virtually worthless house. In fact, the stigma is even reinforced by the federal government in the way government credit counselor advise against defaulting on underwater mortgages. Why the different treatment? Why in one situation is cutting ones losses viewed as purely a business decision, and in the other a referrendum on an individual's moral character? The author goes so far as to suggest that changing the way mortgage default is viewed might actually speed the recovery of the lame housing market.
Read the article and see what you think. Should strategic default on a home loan be subject to any greater moral opprobrium than similar practices in the business world?
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