I haven't been very philosophical in a great awhile, but a recent conversation with one of my wine drinking buddies has compelled me to do so now.
We were discussing a recent 60 Minutes segment about people choosing to walk away from their mortgages, and allowing their homes to fall into foreclosure, because the value of their homes had fallen well below the amount they currently owed, despite the fact, in many cases, they could still afford the monthly mortgage payment.
The conversation got a little heated, when I said I could understand the reasoning behind the decision. It's purely a financial one. Why continue to pay [and pay] for something that's no longer worth what you paid for it, or even what you owe? Why keep throwing good money after bad, especially when it's cheaper to just stop paying? There has to be a time when it's best to just cut your losses and run [so to speak].
But my buddy felt, if you could afford it, you were morally obligated to continue making the payments. If you entered into a contract, you were obligated to fulfill that obligation regardless of the financial implications. He likened it to borrowing money from a friend to purchase a car, but later found out the car was defective. Would you then refuse to pay your friend back, he asked?
First off, I don't see there being any moral considerations when making financial decisions, and how can you compare a house worth several hundred thousand dollars with a car worth a few thousand dollars?
And how can you compare a friend to a bank, especially a bank that understands the risks involved in lending money for a home loan? Why else would they retain title to the home, until the borrower paid it off?
[note]Incidentally, I would pay back my friend no matter what the cost![/note]
I was then reminded of the controversy surrounding the decision by John Edwards to continue seeking the Democratic Presidential nomination, in 2008, after his wife was diagnosed with cancer. There was a lot of name calling, and people condemning Edward's decision to continue the campaign, and not giving up everything to stand by his wife's side while she fought her disease, all the while professing to know the moral thing to do, and how they would have reacted in the same situation.
Well, it's the same for both cases.
In this case, my friend is retired, living on a nice pension (with health insurance), in a very comfortable home worth over a million dollars, with very little if any mortgage. How can he possibly think he knows what he would do if his house was worth half what he owed.
My point is he can't. Nobody can know. And we definitely shouldn't be passing judgment. Until you've walked in the shoes of someone faced with a tough decision or in a no win situation, there is no way anyone can ever know how they will react.
Not only is it naive to think otherwise, it's down right arrogant.
We were discussing a recent 60 Minutes segment about people choosing to walk away from their mortgages, and allowing their homes to fall into foreclosure, because the value of their homes had fallen well below the amount they currently owed, despite the fact, in many cases, they could still afford the monthly mortgage payment.
The conversation got a little heated, when I said I could understand the reasoning behind the decision. It's purely a financial one. Why continue to pay [and pay] for something that's no longer worth what you paid for it, or even what you owe? Why keep throwing good money after bad, especially when it's cheaper to just stop paying? There has to be a time when it's best to just cut your losses and run [so to speak].
But my buddy felt, if you could afford it, you were morally obligated to continue making the payments. If you entered into a contract, you were obligated to fulfill that obligation regardless of the financial implications. He likened it to borrowing money from a friend to purchase a car, but later found out the car was defective. Would you then refuse to pay your friend back, he asked?
First off, I don't see there being any moral considerations when making financial decisions, and how can you compare a house worth several hundred thousand dollars with a car worth a few thousand dollars?
And how can you compare a friend to a bank, especially a bank that understands the risks involved in lending money for a home loan? Why else would they retain title to the home, until the borrower paid it off?
[note]Incidentally, I would pay back my friend no matter what the cost![/note]
I was then reminded of the controversy surrounding the decision by John Edwards to continue seeking the Democratic Presidential nomination, in 2008, after his wife was diagnosed with cancer. There was a lot of name calling, and people condemning Edward's decision to continue the campaign, and not giving up everything to stand by his wife's side while she fought her disease, all the while professing to know the moral thing to do, and how they would have reacted in the same situation.
Well, it's the same for both cases.
In this case, my friend is retired, living on a nice pension (with health insurance), in a very comfortable home worth over a million dollars, with very little if any mortgage. How can he possibly think he knows what he would do if his house was worth half what he owed.
My point is he can't. Nobody can know. And we definitely shouldn't be passing judgment. Until you've walked in the shoes of someone faced with a tough decision or in a no win situation, there is no way anyone can ever know how they will react.
Not only is it naive to think otherwise, it's down right arrogant.
Comments
See you at coffee if your buying as I still have a small payment on my house!
G