yjacket

Absolutely. Banks unfortunately did lend to people who had no intention of paying a nickle on the loan during the housing bubble. NINJA loans (no income, no job, no assets). They did it b/c they could get the closing costs, repose the house if they defaulted and sell it at an even greater profit. Stupid business-wise and has gotten the banks in a lot of trouble. The banks didn't evaluate what would happen if home prices went down.

And for the 3rd time, I'm telling you yes they do-all the time. One makes payments b/c it's in your best interest to do so, not b/c you "must" make payments. The bank doesn't evaluate you whether or not you think you "must" make payments, they evaluate you whether or not you "will" make payments. The two are totally separate. Just b/c I know what the contract I sign means and I know there are exit clauses doesn't make me any less credit worthy or less likely to pay the money back. If something in my past says that I won't make payments then the bank will be less likely to lend to me. What I think about the contract is irrelevant it is about what I will do.

I agree with the vast majority of this. Would I do it, it depends on the situation. I never want to be in that situation so I have taken steps to ensure I'm not. I would add that just about every business decision hurts some people and helps others, it's just the way it works. One man's loss is another's gain. Thousands and thousands of people are today able to buy homes for cash and never have to worry about feeding the alligator b/c of the housing bubble/crash. It's great for others and bad for some.

Well, I don't think they got a loan specifically with the intent to default . . . if that is the case why get a loan? The bank does get to repose the house. So if you intend to default you are just wasting money. No one gets a loan with the intent to default (unless you truly are a scamster). I am just explaining that default is an option, you don't have to be "struggling to make payments" to default, the bank knows it and assumes that and defaulting has nothing to do with being ethical. It is embedded in everything about the loan buying process.

It is only a real problem b/c you claim it is a problem. If I am to state your position correctly, you believe that there is only 1 way to fulfill a contract on a mortgage if someone has the means to do so and that is to pay it off. I trying to explain that a mortgage has various methods of getting out of payment, one ethical way to do so is to default and give the house back to the bank. It would actually be unethical to "lock" someone into paying for a mortgage that they do not want to pay for. If you are referring specifically to someone who has a loan on a house, buys another house 1st and then defaults on the 1st house. An individual has to be in a very, very good financial position to do so. And if they are in that good of a position, they didn't get there by accident, they worked for it. Defaulting on the 1st house will cost them, they will have penalties associated with it. You are making it seem as if they get off scott free: they do not. Just because they aren't destitute and living in a card-board shack doesn't mean they are not repercussions. And I think the repercussions should be harsh. Until the Federal Government got involved, banks would pursue the individuals for the difference of the loan. The IRS pursues taxes on the forgiven loan amount. Their credit is shot and they wouldn't be able to purchase anything using credit for at least 7 years. In general, the only way out of such a situation was to declare bankruptcy. The banks have eased up on the punishments, that's not the defaulters fault. Again that is a very weighty decision that someone makes, it isn't made lightly and without regard to consequences; but to claim it is unethical I believe is too much.

Actually it is not insane reasoning. What about car values? Who purchases a car expecting that the car will go up in value. Many cars now cost just as much or more than a home. No one complains when car values decrease . . . in fact everyone complains when they go up. My point is that a house is the only thing that society purchases using leverage that people hope and dream goes up in value. It is absolutely asinine that culturally we have been brainwashed into thinking that increasing home prices are actually good for us. Increasing home prices are actually the opposite very, very bad for everyone (except banks and those who use financial leverage). And a simple exercise in math will prove it. Home A is at 100k, Home B is at 200k. A 10% increase in values means home A is now worth 110k and home B is worth 220k. The relative difference increased from 100k to 110k. Meaning that if the person who lives in home a wants to move to home b they now have to pay 10k more than they would have. If their income has suddenly increased, great no problem, if it hasn't they are now paying more to purchase home b. And in this current environment (especially since 2000) incomes have gone absolutely nowhere, meaning that all things being equal home prices should go nowhere. In fact, if it weren't for the stupidity of 30 year mortgages and debt people would be glad home prices go down. In fact what people need to be concerned about isn't whether their particular home went up or down in value, but the relative value of their home compared to everyone else's. And your home value doesn't even come into play until you actually sell it. It could be worth $2 today and 100k when I sell, it doesn't matter until I actually sell it. A house is an expense, it isn't a place that magically saves money or stores wealth. Society-wise we'd all do better to just view it in that manner. It is a business transaction, no more no less, instead we attach all sorts of emotion to it that clouds our minds into believing it is something more than simply put a place to live and keep us safe from the elements.

I'm just curious, but why do you personally care what $ value your home is worth? How is that something that should stress out your day-to-day life? Why do you not care as much about say laptop prices going down? Someone bought a laptop this year much cheaper than I did last year, I don't care. I felt the price I bought my laptop at was a good price, so I bought it.

I'm not interested in taking personal shots at you, I'm interested in getting to the heart of the matter. I would say yes it does affect you . . . but so does just about everything anyone does. According to this logic anytime anyone does something that affects other people in a way that is possibly bad it is unethical? For some people it affects them in a good way and in others a bad way? So it is unethical if it affects anyone in a bad way?

Umm, actually yes lenders do calculate default rates into their spreadsheets. Default rates are put into interest rates, etc. And yes, lenders know that a lot of people won't make payments. Credit scores, etc. are there for lenders to assess how likely they are to get their money back. And without the Federal Reserve mucking with interest rates, rates would actually rise to reflect the amount of defaults in the system.

Now, I never said anything about lying on documents being ethical . . . I was specifically addressing strategical defaulting. Lying on a document to get a loan is obviously dumb, unethical, and against the law. Negativo on the money being covered somewhere. The money never existed in the first place! 2 facts about our monetary system: 1) All money is loaned into existence 2) In our society if we had no debt we would have no money. Where do you think the banks got the money to loan in the 1st place? I'll give you a hint, they didn't have it in the 1st place. The through the magic of fractional reserve lending created it out of thin air. Sure it might be an entry in a ledger book, but it is just a book-keeping action. There are only 2 ways money gets destroyed. 1) Loans are paid back. 2) Currency is actually destroyed.

Ah . . . now we finally get to the crux of the issue. You believe strategically defaulting is wrong because it drives down the price of your home. This has nothing to do with them, it has everything to do with you. You did everything "right", so now you are mad b/c they are getting off scott free and you are getting shafted.

I completely agree. My point is that a contract generally has the following: 1) the 2 (or more parties) that enter into an agreement. 2) Specifications of the agreement 3) Ways to fulfill the agreement 3a) delivery of or execution of #2 3b) exit clause(s) of the agreement i. penalties associated with the exit. If the party exits the agreement without execution of #2 but has paid the penalties as specified in the exit clauses then the individual has completed the contract. It isn't unethical to use the exit clause of a contract. Bad form, bad taste, possibly bad for future business, sure, unethical no. It is unethical to use the exit clause without paying the penalties specified in the contract (as you have now violated the contract). Obviously the vast majority of the time it behooves the individuals to accomplish 3a. But sometimes situations change and it becomes necessary to exit the contract without execution of the agreement. I'm not arguing that it would be best to always execute the specifics of the agreement, just that sometimes the situation changes and one needs to exit the contract. That is why exit clauses exist. It is not unethical to use that exit clause. Only the person who actually made the agreement can make the decision if exiting is correct or not. I bet in most situations you did not and do not have the full range of information about why someone exited a contract. For example, I almost bought a huge house a couple of years ago, put in my contract and signed my name. I quickly realized it was not the right thing for me to do, I exited the contract as specified in the terms. I "could have" easily followed through with the contract, but decided it was not right. What I did was no more unethical than someone strategically defaulting on a mortgage.

In fact I'll give you another example. Stockton, CA Stockton, California To Declare Bankruptcy Stockton strategically defaulted. Yes, they were backed into a corner, but they could have voted to raise taxes to pay their debts, they could have increased revenue to pay it off. Unlike an individual government entities always have additional sources of revenue from taxation. Is it unethical that Stockton defaulted? Should they have raised taxes to keep making payments? They could have continued to pay but decided not to. I venture to say that most people who strategically default don't "like" doing it, but sometimes it is necessary. Just because one isn't destitute when one defaults doesn't mean it isn't painful. There are always consequences, those that strategically default have determined that the consequences of default are less than the consequences of being stuck with a pig for xyz # of years. How do ethics enter into that equation?

And this has to do with Mormons how?? There are gobs of people who are strategically defaulting and most of them are probably not Mormons. I live in one of the cities most hit by foreclosures, strategic foreclosures etc. One persons lose is another's gain for example: Foreclosure sale gives family a place to grow | ajchomefinder.com This person bought a decent home for 40k, homes were going for 120k+ a couple of years ago. Say I'm an investor and I buy homes to rent them, If I had bought at home in this neighborhood 120k, I'd wouldn't think twice about letting it go. I made a bad bet, let the puppy go, deal with the consequences and move on with life. It would be insane to keep making payments on a 120k mortgage when prices are at 40k and my rent payments are less than the mortgage payments. According to the logic presented here, the investor (who can make payments) should keep the house and should keep making payments. I bet there were tons of strategic foreclosures in that neighborhood. . . those foreclosures drove prices much lower. So low that this lady was able to buy for cash. She now has a place to live the rest of her life that was made possible by foreclosures and the liquidation of debt. If the investor kept making payments he would not be able to free up capital to do other things such as provide investment capital for a better use of resources. In fact that is one of the things keeping this country stuck in a deep economic freeze, the inability of people to liquidate debt. If an investor can liquidate properties through a foreclosure process that he can pay for and it not be unethical then what is the difference with Joe Blow who bought a house. Again, businesses liquidate debt all the time and it isn't considered unethical or immoral . . . it's just part of the cost of doing business. So why if an individual does the same thing is it considered unethical?

Very true, just b/c it's legal doesn't make it right and just because it's illegal doesn't make it wrong. What is just law is another topic. My comments are addressing, the law, honesty, ethical not "what is right". In situations like these "what is right" is extremely hard to determine and is different for each person. To pontificate as if I know better is a little presumptuous. "What is right" is really determined between the two parties and God. Nothing in the scriptures (at least to my knowledge) directly addresses this issue. In fact, the old testament probably backs me up as on wiping out debts as there was something of a debt Jubilee: http://en.wikipedia.org/wiki/Jubilee_(biblical) All I am suggesting is to not look so hard on people who are strategically defaulting and claim they are unethical. Maybe they are, maybe they aren't . . . that is really between them and God.

Obviously a lot of people do not understand contracts. (And I would add that a mortgage is a contract.) A contract has an exit clause. Someone who uses the exit clause is fulfilling their end of the contract. (Foreclosure is one way to exit the mortgage contract). It is immaterial why someone uses the exit clause. If someone attempts to exit the contract in a manner that has not been renegotiated by both parties, then that person is at fault. You are right it isn't about blaming creditors, it is about a contract and fulfilling that contract. Exiting the contract is a method of fulfillment. Those who exit without paying off the mortgage are assessed a penalty (and in many cases many penalties). They have to pay taxes on loan forgiveness, they have a severe hit to their credit, they will probably not be able to buy a house again using a loan for many years, those are the penalties for exiting the contract in that manner. In some instances taking that hit is much better in the long run than suffering by paying a mortgage on a house now worth 1/3rd the mortgage. In the broader scheme, the major problem we have in this country is debt, too much debt at the local, state, federal, individual, corporate level. There are only 3 ways to get rid of it; 1) hard default, 2) inflate (soft default), 3) pay it off. #2 is what will happen, #3 is being attempted in Greece, #1 is what should happen. On a societal wide basis, #3 cannot possibly work as at some point you cannot squeeze blood from a turnip. The best way is to just cut your losses and move on. In fact, I would be willing to bet dollars to donuts that if more people strategically defaulted we would end up being better of in the long run. People would be able to get rid of bad investments, learn from their mistakes and move on with life. Instead we feel "obligated" to pay b/c we can pay. Once you realize it is just a contract things become a lot simpler.

My integrity is priceless; and it means a heck of a lot more than being "honest". Integrity - Wikipedia, the free encyclopedia My integrity isn't perfect, but I try to find the truth of things and live my life according to those truths. Just b/c we have a difference of opinion on this matter doesn't mean you have more integrity than I do or more than someone else. If you wouldn't do it, great, but I wouldn't be so harsh to judge someone else as being unethical in this situation.

Maybe, maybe not; I've given a lot of thought to these sticky situations, they are very difficult as to what is "right" and what is "wrong". I don't know the full situation of the folks you've described so it's completely possible they are unethical. It's just really easy to judge without having the full and complete story. Many times I've found that people judge another as unethical or immoral simply b/c it's something they wouldn't do not b/c it is right or wrong. They see someone "take advantage" or "get something for nothing" and there is a secret wish to get the same benefit and if they can't get the benefit it is labeled as unethical. Maybe it is, maybe it isn't, it just depends on the situation.

That part of it just sounds like negotiation to me. People negotiate, bluff, call bluffs, etc. all the time that doesn't mean it is unethical. If the bank reduced their mortgage, then hey they are good negotiators. Nothing in the contract says you can't renegotiate it. If the bank was willing to renegotiate then that is between them and the bank. You can't "list a home fraudulently" unless it's not yours to sell. A lot of people list their home with no intention of immediately selling it just to test the market. I don't see where a family renting out a house and not making mortgage payments correlate. Now if they were renting out a house they didn't own or a house that had already been foreclosed on that is a big problem. I own my house outright, so if I rented it I'm not honest b/c I don't make mortgage payments? Making mortgage payments and renting out a house are not correlated. Renting it out while being foreclosed on, I think is okay as long as the people who are being rented to know that it is month to month. If they have a year contract and they could be foreclosed on at any moment that is a problem b/c you are defrauding the renters into thinking the contract is for a year when it may not be. Month-to-month has already laid out that the contract can be terminated at any time by any party.

In this housing bubble, very few are completely innocent. The banks should have known lending money at the prices they were was bad and would get them in trouble (in fact some did that and were penalized b/c of it). Many banks knew it was wrong (I've had conversations with individuals who worked at the big banks during the bubble), the individuals who purchased the homes should have known they were buying too much home. 300k loan when you are making 60k is stupid. The federal government encouraged it, the federal reserve encouraged it, and know we are dealing with the aftereffects.

I don't know, unless they explicitly told you that they never plan to sell I wouldn't make such judgement. I know I've been in situations where if x doesn't happen I will sell. X happens so I don't sell. If the bank didn't deal with them, it might have been in their best interest for them to actually sell. Who knows, except them.

I find nothing unethical or dishonest in foreclosures or short sales as long as the terms of the contract are being followed. I think too many people believe it immoral or unethical when someone strategically defaults. A mortgage is nothing more than a contract. The simple terms of the contract are in broad strokes as follows: 1) Bank lends (creates money out of nothing, but we won't go into that here) money to an individual. 2) In return for the money, the individual promises to pay x in interest and principle. 3) In the case that the individual does not fulfill #2, bank takes house as collateral. No where in the contract does it say the individual "must" make payments. The contract is essentially an if/then clause. If you make payments, then you continue to keep the house, if you do not make payments, then the bank takes house. Ultimately until you finish payments the banks owns the house. I actually applaud anyone who has come to the logical conclusion that they bought a house for too much money and should get rid of it, even if they have the means to do so. Now I do believe that banks should be able to go after the remaining amount of a mortgage from a foreclosure or short sell. For example 300k loan, foreclosure for 200k, banks should be able to pursue the individual for 100k. And in many states, banks do have this ability (recourse vs. non-recourse states). And ultimately, if the individual who defaulted truly cannot pay the 100k difference they can declare bankruptcy to eliminate the debt. If the person has the financial means to pay the 100k loss then the bank should be able to pursue that individual. And that is where the courts come to sort it out. I would find unethical someone who defaults with no intention of ever making future payments and then continuing to live in the house until the cops kick them out. That person has violated the terms of the contract and is now violating the property rights of the bank by continuing to stay in a house they no longer have any claim to. From what I've read and gathered what I've written above was generally the SOP up until the housing bust. Unfortunately with the stupid Fed. Gov. getting involved in the foreclosure process, it has really mucked up the process. For example, in order to be eligible for some of the housing bailout money the individual has to show true need, which basically means you have to default on your mortgage for 3-6 months. Of course after 3-6 months of non-payment banks start the foreclosure process, making it harder for those individuals to receive bailout money, etc. Personally, I think if someone says it is dishonest to strategically default, then it is probably dishonest to take bailout money too. Businesses strategically default all the time and it is not seen as dishonest. The housing bubble/bust is endemic of the corrupt dishonest monetary system we live in; when a monetary system is built upon inherit fraud it will be very difficult for actual individual actors to remain without blemish (I think you can still be honest, but it is a lot more difficult to do so).

As much as I like science fiction (I love Asimov, Ray Bradbury, etc.), in this arena I believe history is more exciting than fiction. I'd rather read When Money Dies (about hyperinflation in Germany- which helped give rise to Hitler), The Rise and Fall of the Third Reich, or Conceived in Liberty (about the founding of the colonies and the Revolution). Reading actual political history about tyrannical governments and their overthrow is much better than reading a fictional story about it IMO. I haven't read The Hunger Games, but I've taken it's something akin to Atlas Shrugged-minus the whole going Galt thing. If it gets people thinking that is a good thing. But one thing I have learned in reading actual history of tyrannical governments is that people always get the government they deserve. No dictator can maintain power and influence without the will of the populace - which is why it is foolish to "save" or "free" other countries from dictators-the populace has to overthrow them. Government is people and people determine what kind of a government they get.

I think b/c of all the messed up messages we receive from society, raising kids can be very difficult. John Rosemond has some excellent books on parenting (some things I disagree with, but on a whole he is very good). The key thing to remember is that a parent's job is to emancipate their children from them - not to be a friend or a buddy. If you do it right, the parent/child relationship will become so much more than a friend or buddy.

I am an engineer, working on a PhD. I've often thought if I hadn't been born into the church, I'd probably be agnostic. I understand where you are coming from; I am very logical and extremely anal-retentive. As a missionary, I personally had to understand the gospel from a logical perspective before I could teach it, otherwise it just didn't make too much sense. If you are looking for a checklist of what it is to be LDS, the best is to stick to the basics. Someone else quoted the baptismal interview questions. Another list is the Articles of Faith: The Articles of Faith But ultimately it is more simple than that. 1) Do you believe in God the Eternal Father, in Jesus Christ as your Savior and in the Holy Ghost? 2) Do you believe that Joseph Smith was God's prophet called to establish His Church and that today men are called of God to be Prophets? 3) Do you believe the Book of Mormon to be the word of God like the Bible? 4) Do you believe the Church of Jesus Christ of Latterday Saints is His one and only church on the Earth? Those four things are really it. Ultimately all doctrine comes from the scriptures, so if you want to learn doctrine: read the scriptures. This is why the BoM, PoGP, and D&C are so important; they help clarify the doctrine in the Bible. My opinion on xyz topic, or someone else's internet opinion doesn't matter. To find answers, one has to go to the source the scriptures and ultimately God and be willing to accept whatever answer is given.