Moral Component of Recovery

I have a confession...

I bought my house at the peak of the market. And not just in the peak year (2006 in Tallahassee), but in the peak month of the peak year (May). So, like approximately 15 million other Americans (according to Moody's Economy.com), I am "underwater" on my house (meaning I owe more on it than the house is worth).

So what do you think that I should do?

According to a recent Pew Research study, 36% of Americans would say that it is alright for me to "strategically default" on my loan, that is to say, to purposefully stop making my mortgage payments even though I am able to afford them, and walk away from my house.

If that trend is troubling to you, it should be. A continued rise in strategic defaults would mean a whole new wave of foreclosures entering the market over the next 2-3 years. More foreclosures would put increased downward pressure on home prices and keep us stuck in the negative feedback cycle in which we presently find ourselves.

If we are to have any hope of a real estate recovery in the near term, then Americans must make the decision to honor their promise to repay the money that they borrowed for their home (or vacation property, or car, or boat, or whatever). This is absolutely essential. If honesty and integrity disappear from our society and economy, then there is no hope for the future of our nation.

"Pay to all what is owed to them: taxes to whom taxes are owed, revenue to whom revenue is owed, respect to whom respect is owed, honor to whom honor is owed. Let no debt remain outstanding except to love each other" (Romans 13:7-8).