My aunt walks away

[jon]

I checked my mortgage, and it says "I promise to pay X with interest to the Lender." So ethically, you are breaking a promise if you walk away, especially so if you have the means at your disposal to keep that promise.

[rose-colored-coolaid]

[Robroy]

[Robroy]

[Niuska]

[jon]

[WestSideBilly]

[ira s]

Wasn't it more typical of lenders to be doing the defrauding rather than the borrowers? Weren't there lots of instances where people were assured that they could afford the home when in fact they couldn't?

...And is Richie Sexson unethical? What if he knew how incompetent he would be when he signed the contract? Did he deceive anyone?
All I know is that he managed to get cut by two teams in the same season.

[jon]

If you take a job, you may be asked to sign a corporate policy statement that says if you steal something from the company, you will be fired. Does that make it ethical to steal, because you are simply accepted the terms of the contract by getting fired?

Our society depends on people doing what they agree to do. If signing every page of a 10 page document that begins "I promise" means it is nothing but an agreement of conditions, then the rules will change accordingly. Interest rates will rise if lenders know that borrowers will walk at the first opportunity. People won't have the option of getting a mortgage for less than 20% down, because it is only good faith that makes a low down payment mortgage make sense.

If you took your car in to have it worked on, you couldn't just trust that they would fix your car. Even you get a statement that says "I promise to fix your car," you would have to read all the fine print to see what is really going to happen in the event the car isn't fixed because the mechanic wants to "help his family" by fixing someone else's car instead.

[Niuska]

[jon]

The common usage of the word "promise" means you are giving your word as a person that you will do something, with the understanding that promises are only broken for unanticipated reasons outside the control of the person making the promise. If someone makes a promise knowing that there are likely conditions where they may not keep their promise even though they could if they wanted, then that person is considered to be a liar. I think we can agree that lying in a business situation is unethical.

Do we agree that when you freely sign something that says "I promise to pay X plus interest" that means you are agreeing to do something even though it may later turn out to be disadvantageous to you?

The consequences of the breakdown of ethics in our society is an increased dependence on the legal system. Not that this was ever a perfect society, but in the days before computerized credits reports, people relied on each others' reputation. Now we have credit reporting agencies whose job it is to warn others "don't trust this guy, he doesn't keep promises"

With the increase in the number of people for whom a written promise is ignored, we can expect to see few lenders or much higher interest rates until the laws are strengthened to provide strong disincentives to replace the missing ethics. While some people would welcome the falling price in existing houses, the net effect is bad for society when people can't trust each others' word.

[TJ_98370]

[TheHulk]

"Promises" are broken. Its a nice way to generalize the issue.

Jon let me ask you, who broke which promise?

The Realtor when he said "Housing is foolproof AND it is a leveraged investment, you just can't lose on this"

The appraiser when he said "Oh this dump in the woods has gotta be at least 400K in todays market"

The lender when he said "Oh absolutely you qualify for this no-money down negative amortization loan while I look the other way since you have no documentation to support your 5 figure salary for this 500K house"

The wall street analyst who took a look at the portfolio of subprime and Alt A loans and rated them AAA so the pension fund would buy them.

The rating agencys who looked the other way while everyone rated their bonds AAA++++ certified?

The newly happy and proud "homeowner" who only had greed in his mind and knew the angel on his shoulder was constantly poking him and reminding him can you really afford this house? or was it the poor homeowner who sunk his entire life savings for a 20% down payment so he could really afford the house of his dreams?

Its very easy to say that "promises have been broken". Its not so easy to say who is to blame is it?

[Robroy]

[Robroy]