tag:blogger.com,1999:blog-7708139263643046536.post2189807915752195821..comments2024-03-29T05:31:25.038-04:00Comments on Kresta In The Afternoon: Today on Kresta - June 30, 2011Unknownnoreply@blogger.comBlogger2125tag:blogger.com,1999:blog-7708139263643046536.post-2028809645360005122011-07-02T11:02:44.197-04:002011-07-02T11:02:44.197-04:00Hi Al,
As I was listening to your show about the ...Hi Al,<br /><br />As I was listening to your show about the causes of the US Financial Crisis with Dr. Max Torres, I was a little surprised how quickly you both painted the obligations of paying off a mortgage as a black and white moral issue for Christians. I would love to hear you do a full show on this particular issue in the future, because I don’t quite see it that way.<br /><br />First of all, with any investment, it is the owner of the security who assumes the risk of devaluation. A mortgage is a secured loan. The lender isn’t giving me money as much as he is buying property. He is buying property with the intent of selling it to me for a handsome profit. (With a 30 year mortgage, it’s tens of thousands more than what he paid.) Over time, as I make my payments, I become more of the owner of the property and assume more of the risk for its value. If the borrower is morally on the hook for the entire amount borrowed, this would mean that the lender assumes no responsibility for his bad investment.<br /><br />Secondly, the average home buyer purchasing a home every seven years is not a real estate expert. He is paying for and relying on the opinion of professionals. The buyer was lead to believe the he could sell the property for at least what he paid. Of all the people involved in the purchase of a home, it was the buyer who had the least say in what the price was. The realtor tells the seller what she thinks the house is worth, the appraiser <br />verifies it, and the lender agrees that the amount they are asking is legitimate (and then the Chinese government also agrees as they buy it from the original lender). The incentive for all of these “real estate experts” is to inflate the price of the home to get higher commissions. When the original lender plans to turn around and sell the mortgage, he cares little about whether or not the property he is purchasing is worth the money he is paying for it because he quickly gets rid of the security and the risk. And as you and your guest discussed, government’s involvement had much to do with the collapse of real estate values. With all of these factors outside the borrower’s control, how can we possibly say that he is the only one with moral obligations?<br /><br />Thirdly, my wife and I bought our first house in an undesirable school district. By the time my oldest was ready to start school, we had enough equity in the house to move where we wanted. I wonder about families that made similar plans just before the financial crisis hit. The decision to do the “honorable thing”, and cover the lenders bet, could change the direction of lives as it affects the family’s safety, the children’s education, etc. At some point, investing money in a worthless property becomes a stewardship issue for the borrower. He must way the consequences of defaulting on the mortgage with doing the best thing for his family. <br /> <br />When the borrower bought his home, the seller and all the agents got paid the money that was agreed on (morally covered there). The risk now lies with the owners of the property (borrower and lender). If the borrower walks away, the lender still has the property that he agreed was worth the money he paid when it was bought. The borrower loses his investment and his credit ratings, but will he be spending extra time in purgatory for making a poor moral choice?<br /><br />JoelAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7708139263643046536.post-78495631438153194842011-06-30T21:39:00.331-04:002011-06-30T21:39:00.331-04:002nd hour link isn't working. :(2nd hour link isn't working. :(The Catholic Voyagerhttps://www.blogger.com/profile/01076867908302903171noreply@blogger.com