allgyerj, I think you're in the minority here, in defending strategic defaults.

Prepayment terms are included in mortgage contracts with the expectation that the borrower is free to exercise them. They're included to attract customers, and compete with other lenders. But I repeat: there's an expectation that the borrower may exercise the option on a whim.

The foreclosure clause is included as a measure of last resort to protect the lender. The expectation is that the borrower will make every good faith effort to honour the other terms of the contract, but if they are unable to meet their obligations, the lender has a means to try and recover their value through foreclosure.

Your entire argument basically comes down to whether or not this "expectation" is implied in the mortgage contract. We're arguing that there is an understanding that the borrower will pay if they can. You're arguing it's a completely optional choice, with no moral expectation or implications whatsoever. That's really what it comes down to, fundamentally.

I think the banks would disagree with you, as does pretty much everybody else here.

The banks don't include the "foreclosure" clause as a freely-exercisable option for the borrower, like the prepayment terms. It's a term to protect them, in a worst-case scenario type situation. You're claiming all terms are equal and can be exercised at the whim of the borrower.

I get it. I get your point. Probably as "right" as my point.

To clarify: my argument isnt based on whether the expectation is implied in the mortgage contract. I am arguing that contracts are written under the governing law of the land. Using governing law as a put contract is no different then writing a clause into the mortgage contract called "Put Option" - legally and morally.

I get that you agree legaly, but disagree morally.

No. They are specifically spelled out in the contract.

The "put option" is specifically spelled out in the laws that govern the contract.

But not in the contract. That's my point. Just because something is legal does not mean it is right. I assume you'd also argue that there is nothing morally wrong with discriminating against someone based on race or religion when deciding to whom you would rent out a room in your house or the othe half of a duplex you own (you live on one side the renter on the other)? That is perfectly legal under the exceptions to the FHA, but I wouldn't say it has no moral implications.

There are several other terms the law requires that are spelled out specifically in the contract, why bother to include those, since they are part of the law anyway? Unless they are reiterating those as a specific part of the promise.

Would you argue that it is wrong for a person who lost their job to seek bankruptcy? Of course not. So the act of following governing law is not the issue. You would have to go back to the motivation of the individual entering bankruptcy, if the act of bankruptcy is not immoral.

You seem to have missed my entire point, but it is right there in your last sentence. I am against these strategic defaults/bankruptcies, because the person has the ability to pay and is just choosing not to because it is no longer convenient for them. They are not performing in good faith. If someone defaults or declares bankruptcy because they no longer have the ability to pay, that is different.

Also, I don't really think the options analogy is applicable, as you are using two seperate contracts with (presumably) two separate parties.

I re-write:

I am for these strategic defaults/bankruptcies, because the person has the ability to pay and is just choosing not to because it is an option available to him under governing law.

BTW: http://www.cnbc.com/id/43808274

"And they say it shows that banks and mortgage processors haven't acted aggressively enough to put an end to widespread document fraud in the mortgage industry."

^ illegal and morally wrong. Don't show up to a gun fight with a knife. You will lose.

So anything that is legal is by definition moral? So there is nothing wrong with discriminating against someone based on race or religion (as posted above) simply because it is legal?

I suppose it is better to show up to a gun fight with strawmen? That way you can knock out the strawmen and declare your argumentative prowess?

The problem is, I'm not defending or even discussing the banks' actions.

Or are you also arguing that two wrongs make a right?

Yes. In a democracy the law reflects the collective morality of it population.

No response?


Finally, I get you to state your beliefs, thank you. I disagree, but you are certainly entitled to your beliefs as am I.

I would, however, like you to elaborate a bit. Based on your statement were the following things (which were all legal at one time or another) moral or right, at the time, but now immoral or wrong? (We can drop the term "moral" and simply use "right" and "wrong")

Slavery
At one time it was impossible (legally) for a man to rape his wife.
Denying the vote to someone based on race or sex.
Killing someone based on religion/race/etc.
Requiring someone to practice a specific religion.
Denying same-sex couples the right to marry.
Abortion (reversed, so was it immoral or wrong when it was illegal, but moral or right now?)
Banning interracial marriages
Segregation
The age of consent for sex is 16 in many states, but 17 or 18 in others, in some countries it is as low as 12. Is it moral or right to have sex with a 16 year old as long as your are in one of those states, but immoral or wrong if you happen to be in another? How about a 12 year old as long as you are in a country that permits it?


I'm curious how the simple act of making a law changes morality or right and wrong. Heck, simply crossing a national border or state line would change it. I think our difference is, you think it does, and I I don't..

All examples were morally right at the time. The morality of the population moved away from those things and laws were enacted to reflect that change.

Do you think that ownership of physical land is morally right? There were societies in the past that would consider that to be wrong.

I see nothing wrong with owning property, and what past (or current) societies considered to be wrong does not change my morality. It changes yours. That's our difference. I don't believe crossing a state line or getting a new law passed does it, you do.

Is it the values of the population or the law that that makes it moral? Laws don't get passed instantly, so there is going to be some overlap where the laws don't agree with the collective values of the population. During that time, which is the moral or right act, the law or what society collectively values?