From NPR:
Prof. WHITE: Actually, I don't advise people to do anything. Rather, I wrote an academic article in which I made an observation that has been somewhat taboo. And that observation is that to millions of Americans who are underwater would, in fact, be financially better off if they did walk away, just like Morgan Stanley recently walked away from five properties in San Francisco, five buildings which were underwater. Morgan Stanley just gave the properties back to the bank. But most homeowners, or homeowners as a group, don't walk away. They don't strategically default.
And they don't so because of anticipatory shame and guilt and what I believe is an exaggerative fear about the consequences of waking away from a mortgage. And I argue in my paper that these emotions of fear and shame and guilt are cultivated by the government, by the financial industry and, to some extent, the media. And they do this by cultivating a double standard, a standard in which Americans, average Americans are told to have a moral obligation to pay their mortgage and to meet their financial obligations, whereas corporations freely and frequently default when it's in their financial best interest to do so.
And, in fact, they would be obligated to protect the interest of their shareholders and walk away from an underwater mortgage if it was a financially wise decision. And my argument is that this norm asymmetry, the difference in norms between average Americans and banks leads to distributional inequalities whereby average Americans are bearing a disproportionate burden from the housing collapse.
ROBERTS: And if you divorce the decision from guilt and shame and make it purely a financial one, how do you factor in the potential effect on your neighbors' housing prices if there's a foreclosure on their street?
Prof. WHITE: Well, you know, I think that's a relevant concern, and, you know, we should be neighborly and be concerned about our neighbors. But when you're hundreds of thousands of dollars underwater and being concerned about your neighbor means going through your retirement and having no money for retirement or not being able to send your child to college, you have to ask, how much pain is the average person supposed to bear for the good of the rest of the economy? And my point in my article is that it's too much. It's not the responsibility of homeowners. The - for the most part, people who are still in their homes were not people who were speculating. They were not people who bought more than they can afford. They're people who bought houses that they thought were good decisions. As they were being told, was - you should buy a home - they're being told this by the government, by the media. They're being told there's no such thing as a real estate bubble, so they make a decision, and then now they are suffering.
And they're suffering in ways that have serious consequences for their financial future. And I don't think it's the role of the individual homeowner to prop up the market for the rest of the society.
Vwls has a history of googling stuff and posting it. LOL @ posting a rolling stone article. I smell another vaccine thread in the making.
Read this thread to give you some insight into her, I promise you will not regret it. (I know many have read it but you may want to reread, I just did and my God it is HOF)
http://www.borispoker.com/hall-fame/...g-company.html
Vwls,
Without a lot of hyperbole, plead directly answer this question:
"if your $200k home had increased in value to $600k, would it have been fair for the bank to default on your loan and refuse to let you buy the house?"
The correlation here is that you are making the argument that it isn't fair that you now own a house worth 1/4th of its original sale price. I am countering that it wouldn't be fair for a bank to allow you to continue paying for a home worth 3x what you paid for it, right?
It's still a mystery to me why she quit PFA
She and I were getting along great and doing radio every week, then she just vanished.
FRANKRIZZO: got me, nice bump lol
Is FrankRizzo jsearles?
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