Sunday, November 22, 2009

Realtors Who Complain About Buyers' Ethics

You may know: So-called "business ethics" is the most monstrous, offensive, blinding oxymoron of all time. There simply are NO "ethics" in '[bidness]' which would be recognizable to anyone NOT already committed to the "process."

Which makes the following most amusing: Realtors™, apparently, are complaining about some buyers' willingness to simply walk away from mortgages the properties represented by which are "underwater." The are saying it is "unethical" to abandon a property and cease making contractual payments just because the nominal 'market value' of a piece of property is less than what is owed on the place, even though they COULD still afford to pay on the loan.

No. Really! It's a tactic called "strategic default," and the practice seems to be increasing, especially in those markets where property devaluations and failures have been epidemic. "People default because of the size of their negative equity, not just because they cannot afford to pay," according to authors quoted in the study in the LA Times reported today by Calculated Risk. The questions being raised are two-fold: ..."(J)ust how prevalent are these "strategic defaults"? And what are the social and moral ramifications of jumping ship?"

"Social and moral implications" of refusing to pay on extortionate mortgages? The implications of fucking the bankers who are fucking you? It is to laugh, nest paw? What of the social and moral implications of the rip-offs, distortions, and out-right lies told by banksters and mortgage brokers to put people into hugely over-priced, bubble-burdened properties to begin with? Ah-Hmmmmmmmmmmmmmm? Here's CR's post on the matter:
More on Strategic Defaults
by CalculatedRisk on 11/21/2009 09:22:00 PM

From Lew Sichelman at the LA Times: Owners' willingness to 'strategically default' on loans depends largely on how far underwater they are (ht Ann)

Most of the LA Times article is based on the paper by Guiso, Sapienza and Zingales that I covered in June: Moral and Social Constraints to Strategic Default on Mortgages (pdf)

Sichelman adds some comments from real estate agents on the ethics of strategic defaults:
Nellie Arrington of Long & Foster Real Estate in Columbia, Md., says it is "morally wrong, legally wrong and just plain wrong" for an owner to walk away from a mortgage he can afford simply because the balance exceeds the value of the underlying property.

And on the other side:
Bob Hunt of Keller Williams O.C. Coastal Realty in San Clemente says the moral duty to protect your family outweighs the moral duty to repay the loan.

"Promise keeping is not the highest moral value," said Hunt, who before his real estate career taught ethics and logic at the University of Redlands. "If I promised to lend you my gun and you are now in a clearly dangerous psychotic stage, breaking my promise would be the right thing to do, not the wrong thing."

1 comment:

  1. The implications of fucking the bankers who are fucking you?

    The best way to put it. Problem is while the banksters are fussing about this, they're not losing a dime thanks to Bushco and his bailout.
    Never forget it was Bush who bailed out the banks. Obama may not be overseeing it the right way, but this was Bush's parting shot.