Of all the interesting tidbits in Brett Arends’ article in The Wall Street Journal about how to decide whether to walk away from your mortgage, his admission
Of all the interesting tidbits in Brett Arends’ article in The Wall Street Journal about how to decide whether to walk away from your mortgage, his admission that the middle class is the only part of America adhering to standards of personal financial responsibility might be the most shocking.
Still, when it comes to the idea of walking away from debts, many people are held back by a sense of morality. They feel it’s wrong to abandon their obligations. They don’t want to be a deadbeat. Your instincts, while honorable, are leading you astray.
The economy is fundamentally amoral.
Sometimes I think middle-class Americans are the only people who haven’t worked this out yet. They’re operating with a gallant but completely out-of-date plan of attack—like an old-fashioned cavalry with plumed hats and shining swords charging against machine guns.
Arends goes on to point out that when a business’s debt exceeds its ability to pay, that business declares bankruptcy. He adds that “walking away from debts is as American as apple pie,” unless you’re a homeowner.
Why is Arends so profoundly down on Americans sticking out the tough housing times? He counts the ways:
Arends also notes that in many states, lenders cannot come after homeowners for the money they fail to make on a foreclosure or, when they do, they face significant hurdles in getting that money. With the foreclosure rate so high, many lenders don’t bother. Better yet, from Arends’ perspective, if one’s liquidity is in retirement accounts, lenders who do choose to pursue the remainder of the loan will find themselves unable to access that money at all.
Of course, from a larger perspective, if too many mortgage holders — the 50 percent of Nevadans, for instance — took Arends’ advice, they would contribute to continued depreciation of housing stocks and lenders’ unwillingness to offer mortgages to any but the least risky buyers. The one positive part of Obama’s struggling mortgage modification program, in the minds of most analysts, is the fact that it is helping to spread out the number of foreclosures over a longer period of time, thus keeping home values from going into yet another freefall. A spreading willingness among the American middle class to treat their relationship to debt (and particularly housing debt) as a business transaction instead of the fulfillment of the American Dream (whether that phrase has been trademarked yet by the National Association of RealtorsTM or not) would indeed lead many people to walk away from their often-failed investments.
Luckily for the economy, few Americans are going to stop buying into the idea that home ownership is fundamentally part of the American experience — and many people will continue to pay their underwater mortgages as long as they possibly can.
Rep. Paul Ryan to deliver SOTU response
Chairman of the House Budget Committee Rep. Paul Ryan (R-Wis.) will deliver the Republican response to the State of the Union Tuesday, according to Mike Allen
Rep. Parker Griffith (R-Ala.)
One of the most conservative Democrats in the House -- a freshman who said he couldn’t support Nancy Pelosi again -- is going to switch over to the GOP. Josh
Rep. Paulsen touts balanced budget constitutional amendment
In a post for the conservative blog True North , U.S. Rep
Rep. Patrick McHenry: Please, Conservatives, Fill Out Your Census Forms!
The conservative congressman from North Carolina, a constant critic of the census -- one of the people who sounded the alarm about politicization when the
Rep. Paulsen, Karl Rove the latest to get ‘glittered’
Rep. Erik Paulsen and former Bush staffer Karl Rove were both showered with glitter at the Midwest Leadership Conference Friday
Rep. Paulsen allies with medical device industry to relax FDA oversight
Source: Flickr; Republicanconference (www.flickr.com/photos/republicanconference) On the heels of the Minnesota Independent story last week about U.S. Rep. Erik Paulsen’s cozy financial relationship with the medical device industry, the New York Times reported Tuesday that some health professionals are alarmed by Paulsen’s push to relax Food and Drug Administration (FDA) oversight
Rep. Perlmutter criticizes House measure that would eliminate 800K federal jobs
Congressman Ed Perlmutter today issued a scathing statement criticizing the House of Representatives for passing a spending bill that could put nearly a million federal employees out of work. The Colorado delegation voted strictly on party lines, with all four Republicans voting in favor of the bill and the three Democrats voting in opposition. Perlmutter’s statement: “My number one priority is to get people back to work because that’s the best thing we can do to pay our debt and move forward toward economic stability
Rep. Perlmutter to hold constituent meet-up in grocery store
Colorado Congressman Ed Perlmutter will hold a Government in the Grocery constituent meet-up this evening from 5-7 at the Safeway at 38th and Wadsworth in Wheat Ridge. The address is 3900 Wadsworth. The meeting, where Perlmutter typically sits at a folding table and talks to whomever shows up, is free and open to the public
Rep. Pete Stark Won’t Dignify Constituent by, er, Micturating Upon His Leg
In the tradition of Rep. Barney Frank (D-Mass.), California Democratic Rep. Pete Stark revealed at a recent town hall gathering that there are limits to what
School of Hock
A growing number of college grads are defaulting on their student loans as the economy worsens.