voiceofsandiego.org: Letters... Honor Reality

Wednesday, Feb. 6, 2008 | I wanted to respond to the reader who wishes he could have walked away from his home but didn’t because of his sense of honor made him stick it out and try to stand by the contract that he signed. I admire this reader (sorry, I’m assuming the writer is male in this situation) and what he has done, the sacrifices made and the determination he has in the face of his dwindling savings.

However, there is another side. My brother and his wife bought a small two-bedroom condo a few years ago, at or near the peak of the real estate market. They wanted to "get into something" before homeownership got too out of reach. They too financed 100 percent, but as first time buyers. In the following months, my brother was injured on the job and they had a child.

Now, he’s on disability (which allows him to stay home with the kid) and she has to support both of them because disability doesn’t cover much of anything. When the mortgage increased because of the adjustable rate, their house payment more than doubled. They tried to talk to the bank about refinancing, but they owe more on it now than it can be sold for. The bank told them that they weren’t interested in talking and threatened foreclosure.

They went hunting for another bank, family members, anything that could keep them in their house. They were not successful and they finally made the heart wrenching decision to "walk away." They discovered that they could rent a larger house with a yard for the kid to play in and a garage for less than half of what their monthly mortgage was ... before it doubled. They are able to save substantially more than they were before the move.

They did not come about this decision lightly, nor did they want this to be the way it turned out. They truly regret that they were forced to make this decision, but there was no alternative. They tried to “honor their obligations”, as your reader suggests, but it was not possible for them. For him to suggest that people who walk away from their homes are not honorable is insulting. I believe my brother and his wife made the most honorable decision they could for their family.

Mr. Yaple, I read both the original comments and your response and I think both of you have legitimate points, and gripes. I think the point of the original writer was that there is a phenomenon, as is written about by Kelly Bennett today, that people are taking the "easy way out." There are always circumstances beyond our control that force us to make tough decisions we wish we didn't have to make. Like your brother. You say yourself that walking away was a very difficult decision for your brother, despite his circumstances. I think the point being made by the other writer is that for many, the decision is not difficult. And they aren't in the situation of your brother. It should be a difficult decision.

Posted by Point Loman | reply to this comment
February 6, 2008 4:40 pm

Ms./ Mr. Yaple: when individuals exercise their 'market freedom' some will cry foul and accuse them of being deadbeats, losers. When big companies do it they are called community leaders, and their stocks go up. This IS the reality of capitalism, where those who HAVE the money can do no wrong, and those who have little or no money are always wrong. // Robin Hood thought that those who acquired money by virtue of others unfairly losing it was wrong: of course the wealthy cried foul, but not so loud as they did when the tip of her arrows pierced their brows. Here, reality is this involuntary revolt of the masses and the unfortunate sub-prime meltdown is an unavoidable revolutionary movement.

Posted by Christopher Hall | reply to this comment
February 6, 2008 7:07 pm

Funny, when Enron or Worldcom walk away from their obligations leaving poor and middle class workers in the dust I dont see them or anyone else talking about honor and doing the right thing. If you're upside down on a home, and cannot afford it, you're under NO obligation to toss good money after bad. This is America, land of the free and the land of risk. No one is guaranteed a profit or borrowers who should be forced to throw good money after bad. Fact is NO ONE should bable to buy a home with no money down, with no personal risk at stake.

Posted by Billy Bob Henry | reply to this comment
February 6, 2008 8:06 pm

Don't worry about your brother, Komrade Hall's Amerika will provide him with a suitable flat and a wheel of cheese every month. Your brother need only abide by what the party instructs him...

Posted by D | reply to this comment
February 7, 2008 1:05 am

There is no dishonor in loosing ones home. The bank still has the property, and if the loan was worth more than the home, and the down payment was inadequate, that's the lenders fault.

Posted by Steve K | reply to this comment
February 7, 2008 8:25 am

I'm the one who wrote to Ms. Bennett about "honor." I want to clarify that I was NOT saying all people who face foreclosure lack honor. People face hard times and lose their homes despite their best efforts, and it's a horrible thing to endure and I sympathize with them. I may lose my property yet if something, heaven forbid, befalls my family! I was responding to the call for comment on people who are walking away not because they can't afford their mortgages, but who figure now it's not going to make them a bundle in a couple of years, so they just say, "Screw it." That's robbing the casino because you lost at the blackjack table, and it's wrong. (cont.)

Posted by Honor | reply to this comment
February 7, 2008 10:17 am

Just check out some of the sites Bennett talks about in her article, like link They ask on the home page (under "Is foreclosure right for you?"): "What if you could live payment free for up to 8 months or more and walk away without owing a penny?" If that's not stealing, I don't know what is. And the fact that the bank owns the house isn't a free pass. They're going to take a huge loss vs. what they paid the seller. Yes, they made a careless investment too, but only one party is failing in the obligation he signed up for -- the homeowner who's walking away. And if it's OK for people to break their promises simply because the absurd value run-up ended, then we're in trouble.

Posted by Honor | reply to this comment
February 7, 2008 10:26 am

Honor--I see what you mean--that is despicable.

Posted by Steve K | reply to this comment
February 8, 2008 9:20 am

Honor - Thanks. In no way do I think that its "OK for people to break their promises...". I think its appalling that there are people out there LOOKING to default on loans because their profit potential has been removed. (Lenders shouldn't be left out of the blame game in this one either. They preyed on and lied to these people and made them believe homeownership was possible) I was merely trying to point out that there might be a time when "walking away" is the best decision to make for yourself and your family. I wish you the best with your property and hope something changes for you soon.

Posted by Marin Yaple | reply to this comment
February 8, 2008 11:28 am

honestly people. why are we talking about morals? this is cold capitalism. sympathy for the banks. honor, duty. what a load of crap. This is slave morality. It is meant only for those in the less powerful position and always benefits those individuals or institutions in power. I absolutely agree that no one should be able to buy a home without a down payment. but considering the situation we are in I say foreclose, forclose. Walk Away! Walk away! bring this speculators market to its knees. and maybe some day us less endowed folks will be able to get out from under the landlords whip.

Posted by chard | reply to this comment
February 8, 2008 2:32 pm

"Slave morality!" Nice way to couch taking responsibility for your actions! The real slave mentality is in saying, "Oh lawdy, poor little me! How's the government going to save me?" It seems like everybody's way too willing to consider themselves innocent victims of predatory lenders. I think if people were being honest, they'd admit that the pitfalls of ARMs were pretty damned evident all along. It doesn't take a Ph.D to understand that your interest rate -- and thus your payment -- can potentially go way up upon adjustment. How many times do you have to see that all booms have a corresponding bust before you stop believing the "It will never come down!" nonsense? People thought they could beat the system, and they lost. (cont.)

Posted by Honor | reply to this comment
February 8, 2008 4:14 pm

Some of us who lost don't feel comfortable putting the burden of our bad gamble on the rest of the neighborhood. If I walk away today and my rental property goes into foreclosure, what about the family next door who just scrapes together enough money to make their mortgage payment each month? I just dinged their home value and made their neighborhood less livable. For the same reason I wouldn't let a tenant put a car on blocks on the lawn, I wouldn't just walk away. If I'm forced to, I will. In all of this mess, at least I won't have the burden of shame.

Posted by Honor | reply to this comment
February 8, 2008 4:38 pm

Honor makes a good point. The only people getting bailed out are those who still have good income and ability to pay at a lower rate--that is, those who benefitted by lower intro rates will continue to receive low rates. That's irrational. If anybody should be helped it's the poor families who lose their jobs, have health expenses or become disabled, etc. But they won't qualify for help. Also, it was irresponsible for that family to have a baby before they had created a nest egg to support the child or to not to buy disability mortgage, disability or life insurance,etc. As a 10 year veteran social (welfare) worker, I am appalled at how many people don't think or plan for the future before they bring a child into the world. You can living without owning a house. You have to take care of your children.

Posted by jsc | reply to this comment
February 9, 2008 4:33 pm

Honor Reality

By Marin Yaple, Solana Beach