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Video
Courtesy of PBS News Hour
By
Paul Solman
Published August 19, 2010
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Watch
VIDEO
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When
the U.S. housing market took a turn for
the worse in 2008, many homeowners who still owed the bank money on
their homes suddenly found that they owed more than their home was
actually worth. That phenomenon, dubbed "being under
water," led many homeowners to simply walk away from their
mortgage obligations without paying any more of what they owed.
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"Yes,
I'm defaulting. Yes, I'm walking away. But I'm not
going to keep running a business that is losing
money as the days go on."
Josh
Bartlett, Florida homeowner
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Although
"walking away" negatively affects one's credit score, a
number that shows how responsible borrowers are in paying back
loans, homeowners like 28-year-old Josh Bartlett think it's easier
to rebuild a credit score than it is to wait until home values go up
again. Many other homeowners in Florida, a state that has been hit
especially hard in the housing crisis, feel the same way.
But,
others feel that paying off their full mortgage is their ethical
responsibility. Kevin Jarrett, another Florida homeowner who was
facing foreclosure, felt he needed to "do what's right."
Instead of walking away from his mortgage, he made as many payments
as he could and accepted the inevitable foreclosure. He compares
buying a house to buying a car, saying that "If you buy a car,
it loses value as soon as you drive it off a lot, but you still keep
making the payments for that vehicle. I don't see the difference
with the homes."
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right do you have to say, well, I'm going to not
pay, because now you're taking money from other
people, because, oh, I want to take care of my
family. Well, somewhere along the line, some ethics
have to come into play, you know?"
Kevin
Jarrett, Florida homeowner
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"But,
if most of the people who are underwater walk away, then house
prices will drop even more, and then that will induce more people to
walk away. So, we can have sort of vicious circles in a lot of real
estate markets, local real estate markets, that are going to be very
dangerous."
Luigi
Zingales, economist, University of Chicago Booth School of Business
OPINION
This
story speaks for itself. What you heard are the results of many
years of GROWTH-MISMANAGEMENT and OVERBUILDING.
Just
another reason why we need to vote:
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