I don’t know about you, but this one sticks in my craw (and I’m not even sure what that means).
Forgive Debt and Save the Housing Market
The evidence is growing: Mortgage-debt forgiveness is good for borrowers and lenders alike.
The editors at Bloomberg View have long argued that mere reductions in interest payments won’t do much to mitigate the biggest threat to the housing market: millions of borrowers who owe more on their mortgages than their homes are worth, and are hence prime candidates for foreclosure. The best way to prevent a flood of distressed properties from hitting the market is to forgive large parts of the loan balances. The strategy restores borrowers’ equity, giving them a reason to maintain the homes. Lenders gain by avoiding costly foreclosure proceedings, which tend to leave them holding properties worth only pennies on the dollar.
The above is from an opinion piece on Bloomberg.com
Let me see if I have this right. Just because your house is worth less than you owe, you are a prime candidate for foreclosure presumably because you will just walk away. And, if your lender just gives you a break you’ll have a reason to maintain the home. Am I the only one in America who is bothered by this line of thinking? What does this say about our collective integrity and sense of responsibility?
How do people who work hard, pay their bills and mortgages year after year feel about all this?