Morality and Mortgage Loan Defaults

Why Do We Hold Ourselves to a Higher Standard Than Our Companies?  

I was watching The Daily Show not too long ago and they did a segment on mortgage defaults which got me thinking on the differences between ‘middle class morals' and America's business community "morals."  One of Jon Stewart's ‘correspondents' was trying to get an interview with the Mortgage Brokers of America CEO (John Courson) to ask him why the organization recently defaulted on their loan on their headquarters in Washington D.C.  The irony is that Mr. Courson just gave a speech on why Americans have a moral obligation to pay their debts. 

The Supreme Court has reaffirmed, many times over, that companies have the same rights as people.  So why shouldn't people have the same morals as companies?

What is a mortgage anyway? A mortgage is a business contract between the lender and the borrower, using the property as collateral. It is not simply a promise to repay the lender. It's a promise to repay the lender or to forfeit the home. Isn't that contract fulfilled by forfeiting the property?

Businesses make secured loans against property all the time. If the loan goes bad, the lender takes the collateral. What's the difference when it's an individual?

Look through the financial statements of the big companies involved in the housing market, including major homebuilders and property developers; you'll find references to the "nonrecourse financing" they've obtained. (Nonrecourse financing is a loan where the lending bank is only entitled to repayment from the profits of the project the loan is funding, not from other assets of the borrower.) They're bragging that even if they can't pay their loan no one can legally touch their assets.

So, why do middle class homeowners hold themselves to a higher standard than the companies that have almost bankrupted the country and would have done so without a taxpayer bailout?  But the real question is; when will the middle class home owner who is struggling to pay his mortgage, simply walk away from the problem just like a lot of American companies have done?  And why would or should the middle class feel guilty about it if they (we) do default on thier mortgage?

Karl Hess, Your Agent on The Jersey Shore

Disclaimer:  I am not trying to make a case for folks to default, I'm simply discussing the issue.