The idea behind a strategic default is, if you owe more money then your house is worth, then just walk away. This works well with people who can rebuild their credit, and who can afford to walk away from their investment. But for people who take pride in owning a house, pride in paying off their debts, pride in owning property, strategic default is not an option.
Who do those homeowners think they are they can just walk away from a loan because their house is worth less today then it was worth last year? Lets compare the “walk away” attitude to the rest of life.
Buying a car or truck – Just because your car value drops, does that mean that you stop paying the note? From the time I bought my Toyota truck, to the time that I paid it off, it had lost about 1/2 – 1/3 of its value. But I still paid it off. If we compare a housing strategic default to a car/truck, then I should have stopped paying on my truck long before I had it paid off.
Child support – When my wife and I went through a divorce, and I started paying child support, with the strategic default ideology, I should have signed over my rights and let the kids new step-dad adopt my kids. That way I would have gotten out of paying child support for about 14 years. But that would have also set a poor example for my kids. If people can strategic default on their home loans, why cant dead beat dads strategic default on child support?
If we apply the strategic default ideology to the rest of life, if its costing us money, lets find a way to stop paying.
Where is personal responsibility – People who bought into bloated housing markets should have known prices were going to drop sooner or later – it was just a matter of time.
The people that got suckered into an adjustable rate mortgage and your rates went up, what did you expect? Your going to pay on a house for 6, 7, 8, 10, 12 years, and then give the bank a financial incentive to take it away from you? Why would the bank settle for making a small profit, when they can raise your rates to the point where you can not longer afford your notes, take the home, and then auction the property off for a huge profit?
Flexible mortgage rates give the banks a way to take your home, plain and simple.
A totally unrelated video about the Maxpedition Noatak
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