Any lending contract is written (or at least should be if the lender is at all savvy) with clauses that satisfy them in the case of default. If I, as the loan recipient, decide that I no longer want to be a part of that contract –for any reason whatsoever– then there are obligations that I must fulfill to exit the contract.

Again, I must return to the fact that if the lender knowingly entered into a contract where the obligations placed on the loan recipient in case of default were not satisfactory, then the lender entered themselves into a bad contract, plain and simple.

If I lend my best friend $1000.00, with the clause that if he doesn’t pay me back then I get ownership of his snowmobile, and he decides that it’s more worth it to him to give me the snowmobile then to pay back the $1000.00, well, isn’t he still fulfilling his contractual obligations? Again, we agreed to this ahead of time, so what right do I have to get angry with him about it? Sure, I might think twice about future contractual agreements with him, given that he’s already defaulted once, but in the end if I agreed on it, it’s a done deal.

Now, if we made the same agreement and then he refused to pay me back the $1000.00 OR give me the snowmobile, then he’d be in breach of contract, and in that sense acting immorally.

As an anarchist, this is what it comes down to for me — if a contract is entered into in good faith (in other words without coercion) by both parties, and that contract is fulfilled, then there is no room for either party to complain. As long as the lender is getting the collateral they signed off on in the first place, then the loan recipient has done nothing wrong.

-olly

I encourage you to re-read my original post without emotion. I clearly was not talking about people who can no longer afford their mortgage payments; I was talking about people who can afford their mortgage payments but because they are in a negative equity situation freely choose to abandon their promise to a lender (not necessarily a bank, by the way) and borrow again to buy another property and simply walk away from the first property.

I am not a “bank-apologist” or “state-apologist”, but I am a lender myself. Lending and borrowing are a natural part of capitalism, if not a defining part of capitalism. A lender uses money (the principal) to make more money (the interest and fees). Similarly, an investor uses money (the investment) to make more money (the dividends/royalties/rental fees, etc.). There is nothing inherently evil in these two types of capitalist activity; but, there can be evil in how human beings and organizations of human beings behave in such capitalist activity. And such evil can show up on both sides of the transaction. All I was trying to point out in my original post was that evil does lurk in the hearts of borrowers as well. The property leaping by a healthy borrower done to avoid TEMPORARY negative equity is a great example.

Logan.

Why would this be immoral — it’s what was agreed upon mutually up front?

If the bank didn’t want the collateral in the first place then they shouldn’t have signed an agreement to take it on in case of default — so in the end, if the bank makes the dumbfuck move of agreeing to take on collateral that they don’t want… maybe they’ll learn not to be morons about lending in the future!

Everyone is to blame for this crisis — the government and the stupid fed are of course to blame, both for their subsidy of the behavior that led to it and their moral bankruptcy in robbing the rest of us blind to try to stem the bleeding after the fact — lenders are to blame for being idiots about who and how they lend money out, and then whining about defaults later on — and Joe Q. Public is to blame for taking on a monthly debt that he/she can’t afford.

But even given all of that, if someone wants to bow out of their loan, and are doing so in a way that fulfills their contractual obligations… well, cry me a fucking river Mr. Bank.

-olly