Personal responsibility.
Personal responsibility.
Personal responsibility.
Does anyone seem to know what this means anymore? I shake my head in disgust by the way people today play the victim whenever anything fails to go their way. When I worked with juvenile delinquents, I taught them to understand how their thinking errors lead them to justify negative behaviors. One of the most common criminal thinking patterns is the victim stance.
Oh, woe is me! The world is out to get me. None of this is my fault.
Hogwash. But try to tell that to people in California, who are just walking away from their responsibilities, and leaving someone else, the bank, holding the bag:
“I stopped paying my mortgage in October, after shelling out about $70,000 in interest [over 15 months],” said one borrower, David, who doesn’t want his last name used. “Now, I’m just waiting for the default notice.”
The Los Angeles-based writer bought two properties in Hancock Park, west of downtown, using no-down, interest-only mortgages in 2006. He paid just over $1 million for both.
David had planned to sell them quickly but got caught in the slump. Soon his interest rate will jump by a few points, and his payments will go up by several hundred dollars a month for each place. He figures his properties have fallen in value by at least $60,000 each.
So, David here bought two pieces of property as an investment, and planned on selling them for a profit. He signed a contract, giving his word that he would repay the debt, but when things don’t go his way, he just walks. And who is to blame for this mess?
Current lending practices have created an environment where a measure as extreme as abandoning a home actually makes sense to some people.
Many buyers put little or no money down, so they don’t have much invested in them. That leaves them with little incentive to keep making payments when a home’s market value dips below the balance of the mortgage.
Current lending practices. Note that they didn’t write “current irresponsible borrowing practices.” David signed a contract; regardless of what he has to lose, he should have to pay it back. There was a time when men respected their word, and kept it when they gave it. There was a time when men didn’t like to borrow money, but when they did, they paid it back. Their self respect and reputation demanded it.
Now, thanks to the nanny-state Congress:
…skipping out on a home is easier, thanks to the Mortgage Debt Relief Act of 2007. Previously, if a bank sold a foreclosed home for less than the mortgage balance and it forgave the difference, the borrower had to pay tax on that difference as if it were income. Now the IRS will ignore it.
Mortgage Debt Relief Act of 2007? James Madison is spinning in his grave.
Consider this: if I take a loan to buy a bunch of stock, with the idea that I will sell it soon for a profit, and the stock market tanks, I should still have to pay back that loan. There is one difference between this scenario and the scenario being played out above. It is the empathy people feel for a person losing a house. The majority of the middle class don’t want to lose their house, so they feel for anyone who does, but don’t really care if a person loses a bunch of stock.
So rather than honor their word and repay their debt or work out a solution, people are walking away. What’s worse is how easy the People Socialist Republic of California is making it.
California is a bit of a safe haven for these borrowers, since banks that repossess and then sell a foreclosed property for less than the mortgage that was owed on it cannot come after borrowers for the difference – as long as it’s the initial mortgage, one that has not been refinanced. So if a borrower owes $200,000 and the bank sells the house for $170,000, the borrower comes out of it debt-free.
And for many homeowners, the prospect of becoming debt-free is growing increasingly alluring.
Debt free. They call that debt free. How is that moral at all?
California has spoken on personal responsibility. They made it illegal.
