Today, many homeowners think it’s fine to walk away from a mortgage that is “under water” – that is, the home is currently worth less than they originally paid for it.
These homeowners signed a contract with the lender promising to pay a certain amount each month until the loan and interest were paid. Obviously, their word is no longer their bond in today’s entitlement society.
One owner even had the audacity to tell the lender, whom he hasn’t paid in over a year, that the lender could notify him when he should move out, unless they are willing to give him a new mortgage at the lower price.
Why would the lender give this scofflaw another loan? If the home price continued to decrease, this bad risk has already proven he is willing to walk away from his responsibilities and would do it again!
Many people think that the asset should be lowered to it’s present value and a new loan issued on that basis. After all, shouldn’t capitalism be “fair?”
Put the shoe on the other foot, what if the lending institution sent a letter to these people when home values were appreciating, stating that “your home has appreciated in value by $100,000 and your new payments are hereby increased?” These entitled people would be the first to scream.
An analogy is purchasing a new car. The moment you drive the car off the lot, its value drops. Should the dealer rewrite the contract on the automobile or will these buyers simply walk away from the car sometime in the future, when they feel the asset is no longer worth the payment?
These buyers should be tied up in litigation for years and have their credit rating destroyed because, after all, these are not usually destitute people - they have the money to make their payments, they simply refuse to do so – they are entitled.