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Livlihood as a Business

February 24, 2012

I’ve thought about posting in this direction once or twice, and time and subject finally hit availability.  Here’s a post at the Chronicle detialing how house foreclosures are driving in a predictable path… i.e. some people are figuring out how to make money by having their homes foreclosed.

What still isn’t new is the fact that these million dollar defaulters are choosing to walk away and possibly recoup what they may have lost on their home with some free rent.

“In the lower-priced houses you’ll see more people defaulting because they can’t afford the payments and it’s a choice between feeding their family and paying the mortgage on a home that’s under water,” said Stuart Vener, a national real estate and mortgage expert with the Florida-based Wilshire Holding Group.

“In million-dollar homes, you’re looking at people who can afford it, but they have to make a business decision: Does it make sense to make payments on a mortgage when the home is worth less than they owe?” he said. In many cases, it often makes more financial sense to walk away.

And this is what gets my goat a bit.  On one hand, you have a set of people who were “told” that a path to success involved owning a home, and they were put in way over their heads trying to catch the dream.  Now they’re faced with a loss of what little they put into it, ruined credit, and having to reset life.  I’ve personally seen this up close, and the impact it had on people was telling.

So now you have people who are instead focusing purely on the calculus of making or losing money, and they’re using that as an excuse to default on a commitment.  The money in was probably a wash anyway, and credit rating doesn’t matter as much because they have the resources to rebuild it.  As to life, this is a life choice in the first place, and finding ways to make more money off of hosing a bank is just another day in the life.

I don’t want to be too generic in this.  But I look at the people who view debt as an obligation and find a way to pay it.  For instance, when a particular large purchase my wife and I made went under, we opted to push for faster payment rather than walking away.  Our motivations are always our own, but in part I just couldn’t see defaulting on a promise, especially one that would hurt a business and hurt others in the process.  In the parlance of my peers, that makes me a sucker, not admirable.

So when I see actions like this, I really hope that the lesson I take is that I shouldn’t be doing business with people, since I already know how they’ll treat me if they perceive that they’re losing.

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One Comment leave one →
  1. February 26, 2012 2:41 pm

    I’m not sure they are making a sound financial decision considering that sooner or later we will hit inflation. It’s most certainly immoral.

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