Let's explore the issue of moral obligation with a series of questions.
Where was the moral obligation of those willing to lend money to someone who they knew could not possibly afford the house?
Where was the moral obligation of those willing to lend money to someone when the lender did not care how overpriced the home was?
Where was the moral obligation of those willing to lend money to someone when the lender explicitly knew how overpriced the home was?
What are the moral obligations homeowners to provide for their family the best legal means they can?
Suppose someone could "afford" to make payments but at the expense of say health insurance or better schools? What's the moral obligation on that person?
Does moral obligation only run in one direction?
Should someone have a moral obligation if he signs a contract with a thief?
Generally, people feel a strong attachment to and take pride in their homes, so while people are walking away from their contractual responsibilities, most do so reluctantly - as a last resort. And why shouldn't they walk away? Although many home buyers were participants in the housing bubble, they weren't responsible for its creation. Banks, investment companies (Bear Stearns types), insurance companies (AIG ring a bell?), ratings agencies, mortgage brokers, home appraisers and developers, ignored their fiduciary and client responsibilities. Regulators walked away from their responsibility to regulate the entities that abused the system; the SEC and Madoff is just the highest profile example. The Federal Reserve walked away from sound monetary policy by keeping interest rates at historically low rates for too long, which led to a frenzy of "investment" home buying and building. And lastly, but most importantly, our elected representatives ran away from their responsibility to oversee and manage the people's business in order to curry favor with deep pocket lobbyists for the above mentioned businesses. Congress also dismantled Glass Steagall legislation which since the Great Depression has helped curb highly speculative banking activities and placed a wall between commercial and investment banking. Congress turned a blind eye to systemic problems at government mortgage programs Fannie and Freddie.
Walking away from financial responsibilities, and the American Dream, is a very difficult decision for most, but it may be the most appropriate decision.
Consult an attorney before deciding if a walk away default is the right move for you.
You may enjoy the following James Keelaghan tune called House of Cards:
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