Pay or Walk Away?
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Yesterday, I came across this article in the Wall Street Journal. It reports a growing trend in some areas of the country where home owners simply walk away from their loans even though they can afford the payments. Walk away, meaning, they just stop paying their loan and take whatever hit comes to their credit score, etc. Apparently, in some States, your mortgage company cannot pursue your other assets if you choose this option. Usually, people do so because their homes have drastically dropped in value.
The problem, however, is that there are only a few lines even hinting to the fact that if you simply ‘walk away’ from your loan, you are failing to uphold your end of a signed contract. I have been in countries (and in a business more or less) where contracts are often considered little more than a framework for the deal. Somewhat optional. And the effects of such a mindset are disastrous. I am very concerned about what will happen to our country if more and more people begin to adopt the same attitude to their agreements.
Can you imagine living in a world where a handshake or a simple ‘yes’ was enough to seal an agreement? Where both parties had absolute confidence that the man or woman shaking their hand or saying that ‘yes’ would uphold their end of the agreement? What a great place to live!
Well, this is how Jesus calls His followers to live. ”Let your ‘Yes’ be yes, and your ‘No’ no,” He said. And the beauty of it is that someday (at least according to the Bible), it will be exactly like that. On the New Earth, everyone will keep their word perfectly and completely. No one will be walking away. I can’t wait for that day. But until then, we are wise to uphold our end of an agreement, no matter how difficult it may be.
5 Comments
December 18th, 2009 at 3:56 pm
I can only imagine a world where a handshake is enough. It used to be enough in the US, if you go back far enough. We’re in the middle of a contract situation where our contract appears to not be worth the paper it is written on (28 days late…next payment is due in two days…). Even on the better teams we’ve been on, our contract wasn’t really worth anything. They’d pay six days late if seven meant they had a penalty. If they paid on the seventh, we would never see the extra money anyway!
In both cases, it saddens me to see people with so little honesty. A contract is a contract– whether by handshake or signature, for a marriage or house.
December 19th, 2009 at 9:05 am
Joe,
I like what you wrote. It is true isn’t it? That on the New Earth our “yes” will be “yes” and our “no” will be “no.” What a wonderful place of truth and justice that will be! Your post made me think of a passage of Scripture. I heard a guy preaching on it as I drove to work this past week. John 1 or 2, when Jesus says to Nathaniel, “Behold, and Israelite indeed, in whom there is no deceit.” Essentially, he is not guile, not fake, not phony. He says what he means, and means what he says. Though this does not completely relate to what you wrote, it still does in some sense. I just find it cool that Jesus commends Nathaniel for his lack of guile (even when Nathaniel had bashed the town that Jesus came from). It appears as if the living God is more concerned about whether or not we are truthful in our speech (even if it proves a difficult road to follow) than deceitful in order to promote our own gain. In our day, we prize people who are agree with the majority (even if the majority is wrong), and the fear of man dictates our stances, rather than truth. I am given to this myself. But of Jesus it is said by even His opponents, “We know that you do not regard any man.” That is awesome! Just some random thoughts. Praying for you out there brother.
Rob M.
January 25th, 2010 at 9:05 pm
This article is stunning. http://www.huffingtonpost.com/2010/01/25/dont-look-back-major-play_n_435965.html
The ease with which people walk away without considering anything other than their personal finances is stunning. Le sigh.
January 31st, 2010 at 12:52 am
I don’t know if you heard the state of the union the other night, but here’s what Obama said:
Obama proposed that people who have graduated from college should not have to pay more than 10 percent of their income in order to meet their student loan obligations. Furthermore, the president said that student loans should be forgiven after 20 years, or 10 years if the borrower has entered into a life of public service.
My take on it: Let’s just go and raise another generation of Americans whom we are teaching to back out of contracts, not honor their obligations and get a free ride at the expense of hard-working, honest taxpaying citizens. How can this policy be any good for America and the American people who we are supposed to be raising to be our leaders. This is not a lesson I want to be teaching my kids.
January 31st, 2010 at 9:46 am
I think those who favor such a proposal (as related to student loans) look at the long term tax paid versus loan forgiven and find that the net is a gain in the economic system. In other words, they are looking at macroeconomics and not microeconomics. However, boiled down to the micro-level, and combined with consumer behavior and other models, it is indicated that those with a smaller (or non-existent) student loan payment would have increased purchasing power, and therefore, increase the overall economic benefit by using said power on the economy. This also translates in to non-economic measures, as educational attainment is one indicator of social well-being in a population (measured in many forms) and leads to a more productive and “better off” society overall.
As it stands, many Americans simply cannot afford to attend a college or university, nor can their parents afford to send them. Many students who try to do the “right” thing end up drowning in student loan debt, and I doubt that many would argue that education is not a worthwhile investment.
I am not a fan of loan forgiveness, in general, because it lends itself to a lack of personal responsibility, but I do favor increasing funding and decreasing individual cost (burden) at the onset and forgiveness for those willing to perform public services (Peace Corps, Teach America, etc). I say this, in part, based on my personal experience. Our agency has a hard time recruiting due to the overwhelming burden on new graduates and the meager pay we can offer. As a result, our candidate list is not always as strong as we would like to see it, but there are many who believe that we are not served well by putting bright people in Federal employment– and those same people complain when the government does not perform up to a certain standard.
I do not believe that true change will occur on either side alone (personal versus social responsibility), and I do believe that education on the societal level is undervalued as evidenced by the Nation’s budgeting (supposedly a moral document, but weighted heavily toward military spending and our current unilateral war fighting) even when few will say that education is not important. This double speak is one of many problems with society today.
On a personal level, as a Federal employee whose income is FAR below my private sector peers, I would gladly accept a cap on my payment even if it means paying over a longer period of time. I only had a partial scholarship (athletic + academic) to attend University and by the time I finished my Master’s degree had a mountain of student loan debt. I pay it, but it is not an insignificant portion of our monthly budget. If it were not for my husband’s career, there is absolutely no way I could work in public service, and yes, I think this would be a loss to the nation.
Sorry for the rant, but education is an issue on my mind as I wrestle with the benefits/costs of continuing for my PhD and sending The Boy to a private school.