If Morgan Stanley isn't immoral, neither are you.
With families, friends, neighbors and business colleagues enduring painful decisions on who to pay and how much to pay, our challenged budgets now look at one of the most time honored American debts as another minefield to cross. It is reported that despite the rising stock market indexes, the economic recovery is steeped in rising unemployment on a monthly basis. Some statistics now report that nationwide we may be looking at a 10% unemployment rate. Washington experts, the same faces, people and opinions who so openly rallied around the Obama plan of home loan modifications, must now face squarely the singular dismissal of any notion that we are witnessing success on that front.
Roger Lowenstein's article in this Sunday's NY Times Magazine section, entitled "Just Walk Away" clearly and vividly engages the morality issues which plague our neighbors who may have to consider such situations. Says Lowenstein, "Such voluntary defaults are a new phenomenon. Time was, Americans would do anything to pay their mortgage-forego a new car or a vacation, even put a younger family member to work. But the housing collapse left 10.7 million families owing more than their homes are worth. So some of them are making a calculated decision to hang onto their money and let their homes go. Is this irresponsible?"
Mr. Lowenstein brilliantly places the default decision under a microscope and continues to soothe his readers who experience these crippling bottoms in his comparison to our business leaders who have made such choices without hesitation. "Morgan Stanley recently decided to stop making payments of five San Francisco office buildings.” Says Lowenstein. “Nobody has said Morgan Stanley is immoral.”
But our biggest financial houses and national institutions may not be entitled to this same "pass" that family and friends may so rightfully deserve under the loan modification and Treasury Department guidelines. Federal and State mandates, regulations and guidelines have been enacted to govern the conduct of mortgage lenders and servicers when faced with a defaulted principal residence homeowner. It is obvious from the many cases which I have participated in, and the hundreds, if not thousands, of phone calls and conversations in our office, this default was not planned.
Nobody talks about their planning their default, and how things worked out just as they anticipated. No one has come in and said that several years ago they decided to "speculate" on a home which they knew was overvalued at the time and then pay for a few years with the strategy to watch their equity and hopes evaporate.
On the contrary. The story is quite similar, time after time, that our clients, customers and friends in fact did not speculate on their homes, but rather, bought at a time when the economy was in strong, upward growth and their businesses were solid and their income was wonderful. These are the stories I see. For the people I come into contact with, their intention was never to walk away from their homes.
