People Walking Away From Mortgages

I heard some time ago that in the US you were not obligated to pay your mortgage debt if you defaulted and the bank took the property back. That’s not the case here in Spain, if you buy it, you owe it until every last cent is paid off.

I don’t mean to sound righteous but I think it’s totally unethical for anyone to walk away from their debts. If the people who bought the homes don’t pay for them, someone else will end up paying for them, and in most cases that falls on the rest of us with bailouts and money printing.

For years I ignored my school loans and they actually went to collection. The loans were from the US and I wasn’t even living there anymore and had no intentions of returning, so technically I could have escaped every paying them back. Nevertheless I got my !@##!! together and paid off the loans with a big monthly sum over a period of three years. It felt great to rid myself of that debt and it felt even better to live up to my obligations and do what was right.

60 minutes recently did a special on people walking away from their mortgages. The thing is, these people can actually afford to pay their mortgage but their houses are not worth what they paid. I’m not exactly crazy about what banks do to make money, but if I were a bank and I lent someone $300,000 for a house and instead of paying me my $300,000 back they give me an asset that is only worth $200,000. Is that right?