Five by 8 – 5/10/10: The morality of walking away from your mortgage

Lena Horne has died. Here’s the Monday Morning Rouser:

1) Should there be any morality in the financial promises you make? There was troubling moment or two in last night’s 60 Minutes story on people walking away from their mortgages. A young man declared he felt no responsibility to pay his mortgage, even though he can afford to. So he and his bride have stopped making their monthly payment and with the money they’ll save, they’ll rent an apartment nicer than their house. “It’s the ‘in’ thing to do,” he declared. Swell.

A man who has set up a company to help people walk away from their mortgages declared that people shouldn’t let emotion — or morals — play a part in their decision. We’ve seen the likes of him before — they were mortgage brokers who helped get people into mortgages they couldn’t afford.

But the clients now are different. One in five foreclosures is by people who can afford their mortgages.The comments have run the gamut, but there’s this defense: It’s what big business does.


A government official says regular people shouldn’t walk away from their mortgages because it’s the wrong thing to do. It’s irresponsible. Other regular people will get stuck paying for those who walk away. Big business got millions of dollars from the government to save them and they used that bail-out money to dole out millions of dollars in bonuses while not paying back their debt to the government. Meanwhile, the average American is losing his/her home but it’s irresponsible for that average American to walk away from a fraudulent mortgage! How does that make any sense?

2) Why? Because it’s Betty White, that’s why.

The New York Times — predictably — has the finest line of any review of Betty White’s Saturday Night live appearance: All it took to reinvigorate a 35-year-old comedy show was the presence of an 88-year-old woman.

3) Should America buy American? The Boston Herald makes a big stink because the government bought its swag for the U.S. Census overseas. Or did it?

Meanwhile, a new census analysis shows whites are fleeing the suburbs.

4) Much has been made of Twitter’s and Facebook’s utility for giving voice and exposure to protesters in Iran and elsewhere. But they’re not the only ones using social media; so is the authoritarian state they protest. Twitter and Facebook give Iran’s secret services superb platforms for gathering open-source intelligence,” according to Devin Gaffney of the Rensselaer Polytechnic Institute. New Scientist reports on a conference that considers more research into all of the interactions spawned by the Web.


At the Raleigh meeting.. Gaffney … described how in mid-2009 he set up software to archive every message posted by Iranians using the social messaging service Twitter to coordinate dissident protests. Now that the buzz from bloggers and journalists declaring that this was a “Twitter revolution” has subsided, Gaffney is analysing the 766,263 tweets he has collected in order to assess how justified that description was.

At the time, Twitter boasted about its role in connecting the protestors, but Gaffney’s initial results suggest that Twitter had a greater impact internationally. “Evidence so far suggests a demographic of non-Iranians generating awareness about the situation,” he says.

Gaffney is now trying to find out if the Iranian government itself has been monitoring and reacting to online activity, and whether the authorities have used Twitter to keep track of the protests. “Twitter and Facebook give Iran’s secret services superb platforms for gathering open-source intelligence,” he says.

Today’s MPR commentary is about the usefulness of social media by another authoritarian state — parents.


For example, when Emma and her boyfriend broke up, I learned about it on Facebook several days before she was ready to tell me. The public gossip flew faster than the personal message. But hasn’t that always been the case with social networks? What’s concerning is how prominently Facebook encourages gossip, complete with candid photos, while more personal communication takes a sorry back seat. As if we all were tabloid celebrities.

When Emma finally told me the news, though, I said just what mothers have said for centuries: “I’m so sorry you’re sad. I was hoping it might not be true.” Some things must still be spoken face to face. There is no virtual substitute for tears and a hug.

5) The changing face of politics. SCOTUSblog looks at the appointment of Elena Kagan as Supreme Court nominee and more:


As the days wound down this past week toward Kagan’s selection by President Obama, the nation could look West and East and see cultural conventions on the verge of change, much along the lines of Dylan’s title track. At the Salt Palace Convention Center in Salt Lake City, a Republican U.S. Senator who is a Mormon and has absolutely solid conservative credentials was dumped by his own party. In Boston, some 2,400 miles — and perhaps a world — away, the gay rights movement got a serious hearing in the Moakley U.S. Courthouse on its plea to change the nation’s legal perception of marriage.

What those events have in common, though, is that both will figure in the fight over the future of the Supreme Court that begins later this morning with the announcement of Kagan’s nomination, and both will influence, in coming months and years, the political pressures on the Court.

It’s the best analysis you’ll read today.

TODAY’S QUESTION

Advocates for children warn that they are at risk from cyberbullying, adult predators and other dangers on the Internet. What steps do you take to protect your kids online?

WHAT WE’RE DOING

Midmorning (9-11 a.m.) – First hour: Author Siri Hustvedt investigates the causes of her migraine headaches and episodes of uncontrollable shaking that began shortly after the death of her father (originally broadcast on 3/25) .

Second hour: Sassy spinster Elizabeth Philpot befriends young working-class Mary Anning over their love of fossils. In this historical fiction, the unlikely pair navigate the early 19th century sexism of England’s scientific community as they try to gain ownership and respect for their archaeological finds (originally broadcast on 3/31).

Midday (11 a.m. – 1 p.m.) – First hour: The IP-endorsed candidate for governor.

Second hour: Speaker of the House Margaret Anderson Kelliher and Senate Majority Leader Larry Pogemiller.

All Things Considered (3-6:30 p.m.) – NPR, of course, will have plenty on the Supreme Court nomination and its reaction. It will also look at the possibility of a national ID card.

MPR’s Dan Olson reports on the 20-year-old Americans with Disabilities Act, which , requires transportation officials to make conditions safer. In Minnesota, advocates say, compliance has been slow. Officials say they are making progress. He’ll sort it out.

It is another day of waiting for the DFL solution to the suddenly-huge state budget gap. The MPR Capitol team is staking out hearings and meetings today and we’ll have plenty on the subject here on MPR NewsQ during the day.

  • bsimon

    “A man who has set up a company to help people walk away from their mortgages declared that people shouldn’t let emotion — or morals — play a part in their decision.”

    Who’s morals should influence the decision? It seems to me that if this is viewed as a problem – that people are deliberately walking away from mortgages they can afford, perhaps the solution lies not in a moral argument, but in changing the sanctions for walking away. i.e. if this is such a horrible thing, perhaps 7 years of bad credit is not enough. Of course, the people who decide that are the ones that lend us money – and they seem not only willing but eager to lend money to poor credit risks, because those individuals pay the highest fees & interest rates. Which, come to think of it, is what caused this problem in the first place. So perhaps if we’re willing to revisit the sanctions imposed on the borrower who defaults, we might also impose additional sanctions on the lenders who extend too much credit to those who have no hope of paying them back.

  • How often do big businesses do the “morally right” thing? The Consumerist website has many entries in its “Worst Company in America” competition, full of companies that don’t do the right thing (I believe the winner was Comcast, which I have certainly had hit-or-miss interactions with).

    A business wouldn’t think twice about walking away from an underwater investment in a similar situation. Why should individuals be held to a different standard?

  • vjacobsen

    “Big business got millions of dollars from the government to save them and they used that bail-out money to dole out millions of dollars in bonuses while not paying back their debt to the government.”

    Last I heard, many of the companies who borrowed money have paid it back, though I saw a slight rumble that the money to pay back the debts also came from taxpayers. Regardless, a loan that gets paid back isn’t the same as a handout, no matter where that money comes from.

    Maybe a lot of our problems would be solved if we all sit down and have a discussion of ethics, because too many people make the decision only based on what gets them the best deal. I truly think that walking away from any financial obligation when you do have the ability to pay shows a huge lapse in judgment, and despite any statements made last night to the contrary, Hopefully,future employers and rental companies would look at that and think, “Hey, this guy doesn’t make bad choices, he’s just trendy.” Of course, I write that and I know people who are working on their third bankruptcy just because they don’t feel like they have to pay off their $25,000 credit card bills. They still seem to be doing just fine, but if I could write the rules, not only would these people no longer be able to get one cent of credit, they would be serving jail time. At a certain point, they’ve crossed a line into fraudulent behavior, and that should have serious consequences.

  • vjacobsen

    Doctor Gonzo, maybe the answer is to no longer allow businesses to do whatever they want and hold them to higher standards. Problems solved, and moral relativism nullified.

  • Bob Collins

    //we might also impose additional sanctions on the lenders who extend too much credit to those who have no hope of paying them back.

    I would think that would be somewhat impossible because you’d have to draw a line somewhere. Many of the people who can no longer afford their homes, COULD afford them when they were working.

    Then the worst economic collapse since the Great Depression hit.

    So at what point do you penalize a lender because someone lost their job and now can no longer afford their home?

    If you have to factor that possibility into the equation, nobody will ever buy a home again. It could happen to any of us, any time.

  • nt

    Is there morality in a contract? The purchase agreement for my house specifies clear penalties if I don’t make the payments. There’s no moral dimension that I can perceive in it.

  • bsimon

    Bob Collins writes

    “Many of the people who can no longer afford their homes, COULD afford them when they were working.”

    Absolutely. I wasn’t thinking of people who are losing their homes due to job loss. I was thinking of lenders who wrote mortgages with teaser interest rates, or ‘optional’ payments or accepted applicants’ ‘stated’ income (i.e. no verification).

    I do have a low opinion of people who choose to not make payments they could otherwise afford. I do think they should be penalized more for it: but like I said, what I think doesn’t matter because I am not making the decisions about who should receive credit – the banks do (loosely defining what a ‘bank’ is). To lending institutions, a low credit score doesn’t necessarily mean “don’t lend to this person” so much as “this person is potentially a high revenue stream.”

  • MR

    There is also a difference between having a monthly income less than the amount of your monthly mortgage payment (quite literally not being able to pay), and losing so much of your income that, while you could pay your full mortgage, it would cripple your ability to pay other expenses. That’s another grey area when we talk about more penalties. At what percentage of their income do we say that someone can “no longer pay” their mortgage?

    With a two-income household that suddenly becomes a one-income household, this is an easy scenario to imagine…

  • Bob Collins

    One of the things I kept thinking about when listening to people define their home by how much “it’s worth” is a line that talkradio financial guy Bruce Williams used to give when people who were renters called and talked about throwing their money down a rathole?

    “No, you’re not,” he’d say. “You’re getting something for your money. You’re getting a roof over your head and the right to leave anytime you want, depending on the terms of your lease.”

    It’s interesting to me how people place a “value” on their home only by how much they can sell it for.

    Their car has basically become the same as an automobile. It’s worth less than the amount you owe on it the minute you drive it off the lot. But you don’t hear a lot of people stopping payments on their cars because they owe more than it’s worth.

  • kennedy

    My concern is with neither the morality of walking away from obligations nor the decision of banks to make risky loans.

    My concern is that rates for “good borrowers” are not all that different from those offered to someone with a history of default. It seems that “good borrowers” are subsidizing the bank’s ability to make risky loans which can make higher profits.

    I can get lower health & life insurance premuims if I pass a periodic health screen. How about a similar program that monitors a borrower’s financial health and can offer lower interest rates?