Did you just see what I saw on 60 Minutes Sunday night? If you didn't, then here's the link. It's really worth 12 minutes of your life to see this clip titled "MORTGAGES, WALKING AWAY": http://www.cbsnews.com/video/watch/?id=6470184n
My mouth was hanging open after watching the report. I don't even know what to say, except that this clip speaks to so many things that are going on in our culture right now.
There is no question that there were some shady mortgage brokers, some shady Realtors, some borrowers who pushed beyond their limits during the building of the real estate bubble. But it wasn't everyone.
And now our real estate market is in such a place that people who made responsible choices are often just one life event away from dealing with a house that's not worth what was paid for it. But does that mean you just walk away?
I say no. There are so many options. Renting, loan modifications, short sales, and then finally, foreclosure....to name a few. But what this report does, is make celebrity of a shoulder shrug that will affect us all.
Two couples, who for no other reason than they don't want to pay for a house that's now overpriced, are choosing a strategic default.
A young married couple, still employed, who see no sense in paying on a house that's worth less than what they paid for it and a 50ish couple who's house has lost about 75% of its value. They don't see how they'll ever recover the equity in their lifetime.
Both couple's in the piece seem to have forgotten there are real people behind those "evil" banks. People who loaned their life savings, their retirement portfolios and their investments, so that most of us could have a home far better than our parents or grandparents had.
And although the walk-away is easy, and the featured young couple's credit will be repaired in 7 - 10 years, I wonder if we'll have investors, at reasonable interest rates, who will provide the kind of cash we've become accustom to in the mortgage market? Would you put your stash into mortgage backed securities with a generation that has the attitude toward a contractual agreement that was displayed in this piece?
And don't think I'm letting the 50 year olds off either. I'm not. We all seem to have forgotten that a mortgage is a contract to pay....and there is no clause that says, "but only if the market continues to appreciate."
Oh, and don't even get me started about the so called "counselors" who have made a business of helping people get over their fear and guilt about walking away. Really?
I've said many times in the last 3 years, how fortunate I felt, to have had a Grandmother who lived through the Depression, and at the same time was a storyteller. I heard many stories of how that generation survived our last financial turmoil. And the lesson? They survived. Wait, scratch that thought. THEY THRIVED! My Grandmother lived on to own property again, to build a successful business (when women didn't really do that!), and to enjoy a comfortable retirement. I'm so grateful she passed on her perspective to me. Along with that perspective came the lesson that, "if you are nothing else, be a person of your word."
Too bad both those couples didn't know my Grandma.