Why Felix Should Walk Away 66 comments
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"Felix" means lucky, in Latin. But this Felix hasn't had much luck: after investing a whopping 50% downpayment into his $600,000 California dream home, he's seen the value of his house fall to $270,000, even as the amount outstanding on his mortgage has ballooned to $350,000, putting him among the 8.3 million Americans with negative equity. This is what CNBC calls a "Dollar Dilemma":
Felix asks, quite sensibly, why he shouldn't just walk away from his house. California is a non-recourse state, which means that the lender, was fully aware from day one that if the value of the mortgage ever exceeded the value of the house, there would be a strong financial incentive for the borrower to do just that.
The reaction of the CNBC hosts makes it seem as though Felix had asked whether he should sell his grandmother into slavery. "If you agreed and you signed that contract, you have to stick to it," admonishes Carmen Wong Ulrich. "It's all about that commitment that you made to the house."
To the house? How can anybody make a commitment to a house? I can see that Felix signed a contract with a lender, but remember that the lender was writing negative-amortization interest-only mortgages and then turning around and selling them off to an investment bank to securitize, pocketing an up-front profit. Such lenders kept on making this trade until there was no more appetite for such loans any more, at which point they closed their doors, keeping all their old profits and leaving the losses with the investment banks and the banks' clients.
So I don't think that Felix has any kind of moral obligation to the lender, nor to the sophisticated financial institutions which ended up buying the lenders' mortgages and who should have known exactly what they were doing.
I've quoted Mark Gimein on this subject in the past, more than once, but he really did write the best single blog entry when it comes to such matters, so I'd urge Felix to listen to Mark rather than to the shills of the financial-services industry on CNBC. Mark explains the morality of the situation very well, and ends with a bit more on how such decisions are likely to play out in practice:
Journalists are mistaken when they imagine that a credit score is a judgment on the character of borrowers. It's not. It's a judgment about the likelihood of someone repaying a loan. Bad marks like a foreclosure affect this. But being overextended on credit affects this even more. You might imagine that if you have the magic word "foreclosure" on your record you are automatically a worse risk than someone who doesn't. That's just not true. Lenders don't like to lend money to people who have not paid their debts in the past. But what they like even less is lending money to people who have a mortgage they can't afford and are likely to stop paying their debts in the future.
Now there might be good reasons for Felix to stay in his home: for one thing, he can happily continue paying interest only and no principal for another year or so, which wouldn't harm him very much. And, of course, this is his dream house: if he rents somewhere else, he probably won't be as happy with his home. But his wife is urging him to just walk away, and a happy wife is always a good thing.
The CNBC hosts, however, get unbelievably holier-than-thou with Felix, accusing this man -- who, remember, has just lost his entire $300,000 downpayment -- of profligacy and of trying to beggar his neighbors by bringing down property values even further.
At the very least, I think that Felix should consider a strategic delinquency, when his interest-only period expires. If the servicer isn't talking to him now, then they surely will after receiving no mortgage payments for a couple of months. At that point, he can request a large principal reduction and make a credible threat that if he doesn't get it, he'll mail in the keys to the house. And if the servicer is sensible, they'll give him what he's asking for. They hold no cards at all in this negotation -- although they do seem to have done a magnificent job with the CNBC types.
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This article has 66 comments:
Sincerely,
Rick Santelli
We may be on the way to being a socialist country but please don't encourage it.
And It should be no surprise that many of the states with the highest foreclosure rates also happen to be non-recourse states.
Be realistic. Pay the bill you owe. It's not a difficult concept.
Don't bother me with morals. Felix is no more morally obligated to continue paying this mortgage than bank was obligated to properly estimate risk and write sensible contract.
Does this have a negative impact on society or innocent bystanders? Yes and no. Neighbors' houses decline in value, which equals the better deal that new buyers can get, which nets to zero cost/benefit. Property tax collections go down, the effect of which is good or bad depending on your ideology. Your lender loses hundreds of thousands of dollars processing the foreclosure but the lender's money has flowed to the person who sold you the house - another net effect of zero. Expenses are incurred in the foreclosure process, moving, selling, storage, redecorating, etc. but one man's cost is another's revenue - another net effect of zero.
If you worry about these kinds of moral dilemmas, you might as well agonize about which car company you want to keep in business when you buy a car.
In fact, when you think about it, that fissure has already opened: the states with the massive foreclosure rates are all non-recourse states. California, Florida, Nevada (a bit more complicated there, but basically non-recourse)
Basically, the non-recourse option is an "implicit put" from a legal/financial perspective. People who have puts would, all other things being equal, be more likely to take on more debt and more risk in the pursuit of gain, because their downside is minimized.
And the "Felix" of the call is atypical -- he put down a very big down payment. . . if you think about a California buyer, who put down %10 and is now deeply underwater; he's heavily incentivized to "walk away".
We should take care to structure our incentives to do the things which are for the public good, and the low down payment, non-recourse mortgage is not that at all.
How can the justification that "Felix should've known better" be taken seriously when the lender told him he qualified for the loan?
If the should-have-known-bett... blame should be placed on anyone, it should be the financial professionals that told Felix he was qualified.
On Mar 05 03:09 PM Jarid wrote:
> I guess anyone who buys a new car shouldn't have to pay the loan
> because of the value the car loses when it is driven off the lot.
>
>
> Be realistic. Pay the bill you owe. It's not a difficult concept.
Non-recourse mortgages simply transfer the cost of default from deadbeats (like Felix) onto creditworthy and ethical borrowers, or onto taxpayers if the bank itself defaults. This is called "socializing the costs".
Socializing costs reduces the economic efficiency of the society and make it poorer. There are limits to socializing costs and Obama is testing them.
I wonder if Felix the author made this call.
On Mar 05 03:20 PM Adam O. wrote:
> Felix should stay in his house and sue his lender for fraud. That
> way, he might be able to keep the house and his money.
>
> How can the justification that "Felix should've known better" be
> taken seriously when the lender told him he qualified for the loan?
>
>
> If the should-have-known-bett... blame should be placed on anyone,
> it should be the financial professionals that told Felix he was qualified.
On Mar 05 03:43 PM Steve in Greensboro wrote:
> Reading Mr. Salmon's post and most of the responses gives us all
> a nice view of why the U.S. and U.K. are collapsing as economies
> and as societies.
>
> Non-recourse mortgages simply transfer the cost of default from deadbeats
> (like Felix) onto creditworthy and ethical borrowers, or onto taxpayers
> if the bank itself defaults. This is called "socializing the costs".
>
>
> Socializing costs reduces the economic efficiency of the society
> and make it poorer. There are limits to socializing costs and Obama
> is testing them.
Herbie,
Your days were up exactly 77 years ago. And you can't even spell "Marxist". Whooey, what kind of half-ass John Bircher ARE you, anyway?
On Mar 05 02:58 PM Herbert Hoover wrote:
> Felix, you are obviously a socialist, maexist and/or communist. Don't
> make me berate you in public.
>
> Sincerely,
> Rick Santelli
You guys have to watch this clip from the Daily Show. You will never see CNBC the same again.....gauranteed!!...
www.thedailyshow.com/f...
I don't blame him for walking away but don't act like he isn't at least partially at fault here.
I have my doubts about people who call CNBC for financial advice.
Alex,
Spot on! The debt is secured by the house and nothing more. To default on the note is NOT "breaking the contract"; any such secured loan contract specifically includes provisions to be invoked in the event of default.
The loan negotiators knew that neither they nor the bank "lending" the money was really on the hook for losses in the event of default; they and the loan analysts at Countrywide, Golden West and WaMu are the genuine perps in the line-up. The bank which approved the loan planned from the first second that the request landed in it's electronic in-box to package the debt with other similar contracts, hash them up, and sell them on the unsophisticated and gullible investors around the world.
Now it's true that those investors have been cruelly served by the system and were misled by the connivance of the rating agencies, who should be immediately broken up, pulverized, and cast to the winds. But those investors will still have something after the dust (from the agencies) settles: they'll own Felix's house and should be able to recover something on the order of 50% of their investment.
The oldest saying in the books about investing pertains: "If it's too good to be true, it probably isn't."
On Mar 05 03:18 PM Alex Filonov wrote:
> Debt is secured. Felix by law can walk out of the mortgage if he
> feels like that. What's wrong with this picture? By walking out Felix
> doesn't break contract, bank takes collateral, everybody should be
> happy. Bank took this risk when it wrote the contract, bank expected
> home values to go up forever. Well, assumption was wrong and bank
> lost money.
>
> Don't bother me with morals. Felix is no more morally obligated to
> continue paying this mortgage than bank was obligated to properly
> estimate risk and write sensible contract.
WHAT?????????
Thats the reason I am torn whether I should stay in America or go back to the old country (i immigrated here 20 years ago). What happened to the country I loved? Probably people like Salmon, who claim IT IS AN OK TO SCREW PEOPLE WHO LENT YOU MONEY!!!!! What a moral decay!!! It is actually getting more and more pronounced in the whole culture... it is called "SCREW EVERYBODY".. IS NOT IT ONE OF THE DEADLY SINS, FELIX?
On Mar 05 02:58 PM Herbert Hoover wrote:
> Felix, you are obviously a socialist, maexist and/or communist. Don't
> make me berate you in public.
>
> Sincerely,
> Rick Santelli
On Mar 05 03:18 PM Alex Filonov wrote:
> Debt is secured. Felix by law can walk out of the mortgage if he
> feels like that. What's wrong with this picture? By walking out Felix
> doesn't break contract, bank takes collateral, everybody should be
> happy. Bank took this risk when it wrote the contract, bank expected
> home values to go up forever. Well, assumption was wrong and bank
> lost money.
>
> Don't bother me with morals. Felix is no more morally obligated to
> continue paying this mortgage than bank was obligated to properly
> estimate risk and write sensible contract.
Unreal.
On the other hand, if Felix is capable to maintain the payment, should he walk away just because his equity is upside down? I don't think so. Just like you should not sell a stock at the low, you should not walk away from a house at the low point of equity. You walk away and you have realized your total loss of the down payment and you have nothing to keep. You stay with the house, the equity may come back.
In the current market condition, house prices are depressed BELOW their rightful value. Is the house which was bought for $600K really worth only $300K today? I challenge any one to show me that exactly the same hosue can be put together at a total cost of mere $300K. It can not be done. Every home builders are losing heavily. That means every house is sold far below their cost.
Cash buyers of houses can pick up very good deals nowadays.
tinyurl.com/d25abb
I think people should try to keep their homes as much as possible, regardless of the equity situation. The home is a shelter to keep you healthy and is an invaluable asset as the US dollar loses value quick.
www.hulu.com/watch/608...
On Mar 05 03:07 PM Jarid wrote:
> Good call. We should all just stop paying on our debts when the
> value of the item drops below our loan amount. I guess everyone
> who drives a new car doesn't owe the dealer anything because we all
> know that the car loses a significant amount of its value as soon
> as it leaves the lot. If you sign a contract to pay, just pay the
> bill. It's not an overly difficult concept.
>
> We may be on the way to being a socialist country but please don't
> encourage it.
As for "the promise to repay", people need to rethink what a mortgage contract is. It's not a promise to repay. It's a promise to live up to the remedies spelled out in the contract in the event that you do or do not pay.
If you can keep paying the mortgage continue to do so and live in your house. Otherwise I think you should change your name to Niki Santoro.
It's a rational default and would be a far better allocation of your capital and productivity. The golden rule of capitalism is to maximize your returns. This house is a negative return and it would be against the principles of capitalism for you to stay. There is no moral quandary here. Your prime commitment is not to your neighbours, but your own financial well-being. Paying into negative equity is anti-capitalist.
Landlords are desperate for your business. You will have plenty of more affordable housing options and in the end may be able to purchase your dream house back at a price more in line with its real market value.
On Mar 05 04:49 PM Sentinel wrote:
> The LAST thing Felix needs to worry about is ANY admonishment from
> that Kool-Aid drinking Cornucopian Carmen Wong Ulrich or any of the
> Kool-Aid Drinkers on CNBC think.
>
> You guys have to watch this clip from the Daily Show. You will never
> see CNBC the same again.....gauranteed!!...
>
> www.thedailyshow.com/f...
On Mar 05 10:26 PM hoover wrote:
> Felix, few people would actually share a REAL story like this --
> so I congratulate you. The financial institutions have zero morality
> and they would take advantage of you in a heartbeat if they could
> make money on it. Capitalism works by pushing morality down to the
> 90% of the population, while they themselves cut people off at the
> knees for a profit using the excuse that, "they are just following
> business practices," or some such BS. Capitalism works OK (I own
> a business myself), but a business is not a moral organization.
> It only creates a lot of PR so the population BELIEVES it has some
> moral obligation. My suggestion is to do what is best for YOU just
> as the corporation will always do what is best for it. But, wharever
> you do, don't quit writing articles. Yours are some of the best.
Felix, you say the house was your dream house, correct? You are certainly not getting any of your money back if you walk out on it. Stay in the beautiful house, entertain your guests, live out the dream. I have a nice house too, our guests wow with the view when they first enter it (however, I doubt it approaches your view). I love it and am fighting to keep it.
You know the old saying, "make hay when the sun shines", well the sun shone for way too long and everyone in the housing industry from builders, to financiers, to speculators were out in the fields making hay. Sooner or later you gotta leave the hay alone to get stores up for the winter (or if you are an apiarist you gotta let the bees keep enough honey to overwinter). Unfortunately, people kept making hay and eventually the we killed the hay field.
Everyone kept doubling down and pushing it. Anytime inflation started to rear its head and the Fed would start to focus on inflation how many pundits would we hear scream bloody murder about that? Well, we are paying for pumping the bubble.
Its like the party in the Hitchhikers Guide to the Galaxy, it kept going and going and going, but when it ended it ended in a very bad way.
> The comment "In the current market condition, house prices are depressed
> BELOW their rightful value" is the dumbest thing I've heard all year.
> So you're calling the bottom? It think the crack you smoke is priced
> below rightful value.
Am I calling a bottom? Of course I am not calling a bottom. Houses, just like stocks, can go below their rightful value. But it doesn't mean it is the bottom. It can go further lower, stay there for further time, before the value goes up again. Houses have very long period for adjusting supply and demand. They do not move as quick as stocks.
It is a FACT that house prices are now BELOW their rightful value. Virtually every home builders are sellig houses at LOSS. That is a fact and that tells you houses are below fair value. Economy 101 will work and many home builders will go out of business, cutting off supply and eventually bring the price back up. But I see very few home builder actually going bankrupt yet. So we may still have some room to go and home builders stillneed to go out of business to bring the over-supply under-control. But from an investment point of view, any thing that is below fair value is a long term buy.
> As for "the promise to repay", people need to rethink what a mortgage
> contract is. It's not a promise to repay. It's a promise to live
> up to the remedies spelled out in the contract in the event that
> you do or do not pay.
You can't pay then you walk away. You can pay and you stay in your home. Simple as that.
An actual believer in supply & demand on a finance site, I thought they were extinct here.
Here in our housing market we had a number of builders building absolute $#!+ homes. A buddy of mine was talking about a few homes he was looking at and talked about how shoddily they were built, basically he said most of the homes were only good for the lot they sat on, and those are brand new constructions.
Those builders are long gone from our area. However, builders on the other end of the spectrum are also in dire straits. One builder who specialized in top dollar homes (building for Packer players & the like, my recollection is he built Brett Favre's Green Bay house and others), is now sitting around twiddling his thumbs.
My brother who works for a guy that builds average homes is now spending most of his time on commercial jobs (to be fair, residential construction season probably does not kick off for about one month from now).
The junk bottom-feeder builders are dead, the easy money is gone.
Felix should walk precisely because he will never recover his value. He has already paid for his house with his $300k. Anything after that is utter foolishness.
There were millions of homes in the US built to be be sold to non-prime borrowers, like Felix. The only way the supply and demand can be brought to balance is if deflation stops, and if millions of borrowers who are in arrears already foreclosed, or about to enter rational default are replaced by prime worthy borrowers. Those borrowers are not readily available and the economy is actually shedding them faster than they are entering the workforce.
In the Great Depression (and in Japan still) housing prices took decades to recover and the cost of housing (buying land, building, permits) declined along with it. It is happening again.
So, it's important before deciding whether to walk to first determine whether the mortgage you gave the bank is recourse or non-recourse.
On Mar 05 03:20 PM Crocodilian wrote:
> There's a very important distinction between recourse and non-recourse
> states, and when you look at the economics of busted mortgages, the
> financial choices faced by a homeowner in a recourse vs a non-recourse
> state are so different as to essentially be a different country.
> We risk opening up a major "fissure" in the US, by having incentives
> that are so radically different between states.
>
> In fact, when you think about it, that fissure has already opened:
> the states with the massive foreclosure rates are all non-recourse
> states. California, Florida, Nevada (a bit more complicated there,
> but basically non-recourse)
>
> Basically, the non-recourse option is an "implicit put" from a legal/financial
> perspective. People who have puts would, all other things being equal,
> be more likely to take on more debt and more risk in the pursuit
> of gain, because their downside is minimized.
>
> And the "Felix" of the call is atypical -- he put down a very big
> down payment. . . if you think about a California buyer, who put
> down %10 and is now deeply underwater; he's heavily incentivized
> to "walk away".
>
> We should take care to structure our incentives to do the things
> which are for the public good, and the low down payment, non-recourse
> mortgage is not that at all.
In essence, all first liens are de facto non recourse.
> We put 20% down on our condo in CA as well. ($78K in our case) We
> have a 30 yr fixed rate. We've been making our payments for 4 yrs.
> Now moving out of state for a better job. What do you do? You can't
> sell it without still owing money, you can't refinance to lower the
> payment. We don't want to take on the expense of trying to rent an
> out of state property when current rents don't even cover the monthly
> nut. We've lost considerably in our 401K, etc. I don't know what
> we're going to do. You can't even make an informed decision because
> the bottom hasn't hit yet. Our only sensible choice for financial
> survival may be to walk. If anyone has constructive suggestions,
> please share them.
House Poor:
Try to keep the house and rent it out. The rental may or may not cover the whole expense but at least it makes it easier for you to keep the house. Hopefully as more and more people lsoe their homes and enter the rental market, the rental will go up.
Keeping a house is an invaliable physical asset amid a looming dollar collapse. Your house will soon be worth $10M while you only owe the banks $300K. Don't assume you are rich as $10M in US$ only buys you an average house by then.
If you lose your house now, by walking away, you may never be able to buy another house again. Keep it as much as you can.
The replacement cost of a home during the boom was much higher than it is today due to the cliff diving demand for things like concrete, wood, and roofing. Just check UFPI stock ticker for example.
My wife and I started the construction of our house in October of 2007. I don't know how many times I had the subs and my buddy (who was the real genius behind this project - same guy I talk about who looking at those junk houses) tell me I missed 25% or similar increases in product pricing. However, some of that was made up by having to heat an uninsulated & unsided building in a Wisconsin January.
I was speculating whether or not I should have held off till now to build given the rates, commodities, and labor costs. Our general consensus was that financing the project would have been a lot harder.
On Mar 05 03:19 PM Chris B wrote:
> Society invented contracts and laws so that the question of whether
> to pay or not could be considered a legal issue, rather than an unsolvable
> moral issue. Your obligation under your contract is exactly what
> the contract says and exactly what the law requires. You can walk
> away from the collateral under the terms of the contract and state
> law, just as the person who sold you the house for $600k is able
> to walk away with that cash and you have no recourse to him/her now
> that the house is worth less. Those are the rules.
>
> Does this have a negative impact on society or innocent bystanders?
> Yes and no. Neighbors' houses decline in value, which equals the
> better deal that new buyers can get, which nets to zero cost/benefit.
> Property tax collections go down, the effect of which is good or
> bad depending on your ideology. Your lender loses hundreds of thousands
> of dollars processing the foreclosure but the lender's money has
> flowed to the person who sold you the house - another net effect
> of zero. Expenses are incurred in the foreclosure process, moving,
> selling, storage, redecorating, etc. but one man's cost is another's
> revenue - another net effect of zero.
>
> If you worry about these kinds of moral dilemmas, you might as well
> agonize about which car company you want to keep in business when
> you buy a car.
In fact, it is the only solution. Rents are dropping as housing supply rises. You would be in a market competing with everyone in the same boat as yourself if you try and rent..
The entire point of foreclosure in contract law is to take the moral arguments out of the process. The moral hazard was exceeded when greedy lenders lent to stupid people (encouraged by the government) and folk like you are the collateral damage. Being "house poor" is not your fault. Cut your losses and get away from that mortgage.
You are foolish to keep paying into negative equity. It is anti-capitalistic. Save your financial future.
Also, it is a myth that foreclosure hurts credit. Foreclosures are secured loans. Credit agencies are far more concerned about stressed out owners with negative equity ramping up non-secured credit and then declaring bankruptcy.
Finally, owning is over-rated. You are far, far better renting and banking your savings. You'll get a better housing deal with almost no risk.
On Mar 06 01:18 PM House Poor wrote:
> We put 20% down on our condo in CA as well. ($78K in our case)
> We have a 30 yr fixed rate. We've been making our payments for 4
> yrs. Now moving out of state for a better job. What do you do?
> You can't sell it without still owing money, you can't refinance
> to lower the payment. We don't want to take on the expense of trying
> to rent an out of state property when current rents don't even cover
> the monthly nut. We've lost considerably in our 401K, etc. I don't
> know what we're going to do. You can't even make an informed decision
> because the bottom hasn't hit yet. Our only sensible choice for
> financial survival may be to walk. If anyone has constructive suggestions,
> please share them.
(a bit more complicated there,
> but basically non-recourse)
can you point me to specifics? I've been under the impression that it's a recourse state, and the foreclosed-upon homeowner can get taken to court for the balance when a foreclosure sale falls short of the mortgage total.....
thanks!
Crocodilian--When you say that Nevada is
(a bit more complicated there,
> but basically non-recourse)
can you point me to specifics? I've been under the impression that it's a recourse state, and the foreclosed-upon homeowner can get taken to court for the balance when a foreclosure sale falls short of the mortgage total.....
thanks!
----------------------...
@VinnyV
My understanding -- and you should check with a Nevada attorney on this, is that Nevada is a "one action" state. This means that your lender can only file against you only once; in practice this _sometimes_ has the effect of limiting the size of a deficiency judgment . . . this is a technical issue and requires experienced local counsel, which I am not.
This complexity does speak to the larger point I was making: that the United States has "balkanized" the finance of the most important asset class, for no good reason. There really is no reason that Arizona should have one set of rules, Minnesota another, and New York another.
Sure, you can point to a "laboratory of democracy/economics" thing, but as we have national lenders, and national insurance, it really doesn't make a lot of sense for different states to have radically different rules on something that's so important. Its hard to see any advantage, and easy to see the costs.
THAT WAS THE SMALL LESSON THE GOV. LEARNED ABOUT THE STOCK MARKET DURING THE GREAT DEPRESSION.
MAYBE NOW HOUSE'S WILL REQUIRE 50% DOWN,
JUST LIKE STOCKS.
Moral people do not need contracts, contracts are worthless with immoral people, and the vast majority of us in between those two poles need contracts. Note, my point about how contracts are ineffective with immoral people.
The notion to walk from the contract and send the bank a "jingle-letter" is anticipated and may be provisioned in the contract, but it is hardly moral. On the other hand, if we were talking about property that was 100% investment property from the get-go I would be a lot more understanding. That is generally why the principal home mortgages are more favorable to the homeowner than loans for investment properties.
Like Felix, the blogger, I think the best approach for Felix, mortgager, is a strategic one: Force a re-negotiation at the right time or walk.
You can make contracts with immoral people. You just need collateral to take into account their risk premium.
There is an entire world of immoral criminals who take contracts very seriously. The Mafia, drug gangs, etc. Studies have shown they are more likely than average citizens to honour their contracts, likely because the consequences are more dramatic and thoroughly communicated at the contract's inception.
What is immoral is to hold people accountable for non-contractual obligations based on some greater "read in" context, such as the "think of your neighbours" comments in the CNBC blurb in the article. If it is in a person's best interests to walk from a mortgage, and that is legally permissible, then there is no morality at play here. Perhaps they need to leave suddenly due to cancer, or to take care of a loved one, or they invested with Bernie Madoff. The contact does not judge nor discriminate; it executes. The reasons are irrelevant in the vast majority of cases. Thousands of years of jurisprudence have made this clear.
On Mar 07 10:06 AM Marcus Aurelius wrote:
> The spirit in much of this conversation is there is no morality in
> contracts, just contracts. I say that ignores what contracts are
> in the first place -- an attempt to mechanize morality and make the
> morals in play clear and enforceable with consequences.
>
> Moral people do not need contracts, contracts are worthless with
> immoral people, and the vast majority of us in between those two
> poles need contracts. Note, my point about how contracts are ineffective
> with immoral people.
>
> The notion to walk from the contract and send the bank a "jingle-letter"
> is anticipated and may be provisioned in the contract, but it is
> hardly moral. On the other hand, if we were talking about property
> that was 100% investment property from the get-go I would be a lot
> more understanding. That is generally why the principal home mortgages
> are more favorable to the homeowner than loans for investment properties.