Home Mortgages: Is It OK To Walk Away?

Strategic default, according to Wikipedia, is the decision by a borrower to stop making payments or to default despite having the financial ability to make payments. 

With relationship to real estate mortgages, strategic default refers to a situation where the homeowner, owing more on his mortgage than the home's market value, decides that it's not worth continuing to pay. "Upside down," "underwater," "negative equity" … all of these terms are used to describe a real estate mortgage condition that, in most cases, was created by the collapse of the housing bubble in 2006.

The discussion of strategic default raises some interesting ethical questions in addition to the financial aspects of making this decision. Some say if you can pay, you should. Others say that a moral duty should not be placed upon a financial/legal contract between two parties. The issue becomes even cloudier as we contemplate how these collective individual decisions will affect our nation's economy and our cooperative futures.  

Should our obligation to ourselves and our families supersede our social obligation to the greater good for all? What about the fact that our society seems to impose these moral dilemmas and judgments on individuals, but condones and supports the same behavior for commercial businesses?

Where do you stand on this issue? 

Sharing stories and opinions on this topic will help us all gain perspective and clarity as we wrestle with the challenges that we face during this period in our economic history. It might also encourage tolerance and promote better decision-making for future. Take a minute to give us your view.

More resources:

IRS – Home Foreclosure & Debt Cancellation