posted on Feb, 19 2010 @ 06:11 PM
First off, my initial exhuberance about what this guy did has faded over the day, but I don't view what he did as wrong, just stupid.
1) I agree, he destroyed whatever leverage he had left. He had other avenues he could have taken. If you read up on banks walking away from
foreclosures, you'll realize that he still controls the property until the sheriff auction occurs.
2) Banks lend mortgages under complex interest concepts. This, in a nutshell means you pay that wonderful 5%-9% interest repetitively on the same
dollar. By the time the loan is done, you have, in actuallity, paid 300+% interest. This may be accepted practice, but how many people actually
understand that they are paying one million-ish dollars for a $350K home?
3) When you mortgage a home, YOU OWN IT. You are not renting from the bank and the bank does not own it. THe bank has a lein on it. That's all.
It is not the same in principal, it is not the same it theory. If you did not own you home, you could not sell it.
In the end, yes, a contract is a contract. When you sign a contract saying you will borrow $300K and pay back $900K, you should do everything in your
power to hold true to your word. If you cannot do that, then you should be prepared to give up something. I feel for the guy and the others out
there that are in this plight. I am in a similar plight with a car lease that I foolishly got suckered into. I would love it if someone ran a red
light and totalled my car (assuming noone got hurt), but I am willing to accept the fact that I will end up paying $40K more than the car is worth
just because I signed something I didn't understand.
Still, I do not feel sorry for the banks who are targetted by these sorts of things. In this case, especially, they already got back 100% of the
money they loaned out. All they are losing out on is the interest they would have gotten in the future.