Proficient Note Buyers
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December 22, 2008
Buried
I spent two and a half hours shoveling snow this morning. My front porch, my back patio, my driveway, and my cul-de-sac were all buried under between four inches and three feet of snow. High winds last night turned our neighborhood into Driftville, and even our snowplow guy had trouble moving all that snow.

When I read this morning that more and more people are walking away from their homes because they owe more than the property is worth, I thought back to my shoveling episode. It seemed no matter how much snow I moved, I needed only to turn around to see that I was being overwhelmed by it. That's what it must feel like to these homeowners. They feel like they are being buried alive in debt.

I struggle with my conscience when thinking about the mindset it takes to walk away from an obligation. A Promissory Note is, after all, a promise to pay. There are no guarantees of appreciation when someone buys a house. As a matter of fact, we KNOW most everything we purchase will depreciate the moment we drive it off the lot or take it home from the store. Why then, is it implied that home prices must go UP for us to be expected to continue paying our mortgages?

I guess the thing that really burns me is the real estate investors who gambled and lost. Where else can you 'assign' your loss to someone else? (in this case, the bank or mortgage company that loaned the money) If you lose in Vegas, you're out the money. If you can't pay it...well, at best you're out a couple of kneecaps. If you bought a stock at $120 and it's trading today at $50, you can't 'change your mind' and get back your initial investment - you're going to take a loss.

Maybe I'm simplifying things too much, and I probably shouldn't judge since I haven't walked a mile in their shoes. I don't know what I would do if I was upside-down in my mortgage, but I like to think that I would continue paying, if for no other reason than I'm not one to break a promise. To anyone or anything.

I do feel for the homeowner (who lives in their property) faced with the double whammy of being underwater on their mortgage and unemployed because of job cuts tied to the economy. They truly are buried, and deserve some help shoveling out. Like it or not, the government is handing out shovels to you and I, and we're providing the muscle in the form of bailouts. Better get to digging...we've got a big pile to move.

Make it a great day.

Clint


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