The Home Mortgage Welshers: Making Other People Pay for Your Bad Choices

The Home Mortgage Welshers: Making Other People Pay for Your Bad Choices

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Those of us who pay our debts will, either through increases in interest rates, loan costs or taxes, be forced to subsidize those who don’t.

Which brings me to Sunday’s unnerving edition of 60 Minutes? Morley Safer presented a segment titled Walking Away about homeowners who are welshing on their home mortgage loans even though they have the means to pay them, thus providing us with yet another example of the entitled, anti-big business attitude that we are now seeing writ large in Greece.¹

Here’s the segment. It’s worth watching in its entirety, in spite of the annoying commercials.

Here’s a synopsis for those of you who don’t want to watch the video:

Safer interviews a thirty-something professional man named Chris Deaner who proudly² proclaims that he is going to stop paying his mortgage and leave his depreciated house for his lender to deal with. The smarmy welsher says with a greasy smirk that he feels no guilt and no compunction about welshing on his debt even though he makes enough money to comfortably repay it.³

At one point Deaner grins and says that stiffing the bank “seems like the in thing to do.” So, in other words, he’s ripping off the lender because everyone else is doing it.

Now, I ask you, employers of the world, would you hire this man?

I have a few questions for this Deaner character and people like him:

  1. If a friend or family member lent you the money to buy the house, would you stop paying him when your house declined in value and stick him with the loss?
  2. If your house, instead of declining in value, increased in value, would you have shared the increase with the lender?
  3. In what bizarro world do you think it moral, ethical and humanly decent to spend the money lent to you by a third party and, later, when you become unhappy with the way you spent it, demand that the third party absorb your loss?

In the 90′s and early 2000′s, bankers were pressured by the federal government to make capital available to more Americans so more people could share in the panacea of home ownership. Bankers made mortgage loans to people who would not have qualified for those loans a mere decade earlier.

This, folks, is what happens when you get all warm, fuzzy and do-goody by lowering standards and lending money to people with poor credit histories, shoddy employment records and deficiencies in character?

You get screwed.

Footnotes:

¹  Which political party and ideological philosophy do you think is responsible for the attitude now prevalent among many Americans that it’s morally acceptable to screw over big corporations? (Hint: It’s not the Republicans and the conservatives.) The truth, of course, is  that it is immoral to intentionally avoid paying a valid, bona fide debt simply because you’ll save money by doing so. After all, when it’s a family member who lends the money rather than a nameless, faceless bank, people have a very different attitude about the righteousness of stiffing their lender. But if it’s immoral not to repay a loan from your mother, it is equally immoral not to repay a loan from the bank. Either way, it’s theft.

²  If Deaner had even a tinge of shame that he is welshing on a debt do you think he would have agreed to go on 60 minutes? Quite the contrary. He’s proud of himself and probably at this very moment a hero among his friends and family for having obtained his fifteen minutes of fame.

³  My disgust is reserved for those who have the means to repay their debts and are simply taking advantage of the bursting of the housing bubble to avoid doing so. People who have lost their jobs or for whatever other reason lack the means to repay their home mortgage debts, are not necessarily acting immorally when they walk away from their homes.

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About Peter Pappas

Peter is a tax attorney and certified public acccountant with over 20 years experience helping taxpayers resolve their IRS and state tax problems.

He has represented thousands of taxpayers who have been experiencing difficulty dealing with the Internal Revenue Service or State tax officials.

He is a member of the American Association of Attorney-Certified Public Accountants, the Florida Bar Association and The Florida Institute of Certified Public Accountants and is admitted to practice before the United States Tax Court, the United States Supreme Court, U.S. District Courts - Middle District of Florida

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