Q: My husband and I have a couple of rental properties that have recently gone back to the bank. I struggle with being in a small town and knowing what people are saying as well as the moral dilemma of whether or not this was the right choice. Any insight would help…
A: For what it may be worth, your “moral dilemma” is one that is being shared by millions these days. While I can’t vouch for how many of those millions who have sent property back to the bank feel angst about doing so, I can guarantee you that in this, you are very much not alone. As of 2010, 2.87 million US households had received foreclosure filings and in that same year the number of homes actually repossessed reached the 1 million mark. Obviously that figure has done nothing but continue to grow. Do I throw this out simply because misery loves company? Not really. But I do think it is important to keep in mind that the place you and your husband are in is shared by scores of hard-working, contentious, and morally upstanding people.
It is estimated that over 50% of U.S. mortgages have a negative equity position so this leaves owners here, there and everywhere with your precise dilemma. Do I work myself to the breaking point to keep up with this because I signed a contract with the bank and it’s important to me to honor that, or do I cut my losses and let it go? After watching the banking industry respond to the meltdown that began in 2008 I can tell you that I personally feel little attachment to any bank’s wellbeing. I see homeowners killing themselves to stay current on an upside down mortgage, but I haven’t seen a single bank sweating out the moral dilemma of how we do everything in our power to keep people in their homes. Getting a loan modification is nearly a full time job and all things considered they are few and far between. Refinancing? An option if you still have A-1 credit which is about as common as sightings of the Loch Ness Monster. In other words, banks feel absolutely no moral obligation to the people and families they serve so feelings of moral obligation to an institution are, in my opinion, admirable, but misguided. This is an industry that at the highest levels, sought out every opportunity to take advantage of people for profit. You are operating under an ethical code and I admire that. Banks…not so much. They are operating under the law and regulations and even then, just barely. They aren’t losing sleep over taking people’s houses back so please don’t be losing sleep over holding up your end of a losing bargain. Are there consequences? Sure. And that’s reasonable and fair. Foreclosure will make a ruthless mess of your credit. But that’s part of the deal. You have in fact not held up your end of the deal and those are the consequences. But in my mind, so be it. A decade from now my guess is that the banking industry will right itself and both the industry and society will hold largely nonjudgmental opinions about the financial traumas that took place between 2008 and ???? So while I wouldn’t begin to dream of speculating about when we will raise the Titanic known as the banking industry, I do believe that it is widely known that this time, with all its chaos and confusion isn’t a failure in people, it is a failure in policy.
PLEASE know that I am not advocating or encouraging a lack of responsibility on your part, my part or anybody else’s part. But I am advocating that you really, truly assess where your most important responsibilities lie. If you are putting your family through extreme financial hardship and suffering greatly because of your efforts to stay current on an upside down mortgage that your lender has refused to modify, I believe your primary responsibility in that situation is to the health and happiness of your family, not to your lender. There is a movie that a friend put me onto called “Inside Job”. I highly recommend you and anybody else within earshot watching it. It is a documentary type film that lays bare, much of what has happened and why we have all experienced and are still in the midst of an economic apocalypse. But for as frustrating and futile as things may feel right now, please don’t misinterpret my disenchantment with government and industry for a lack of faith and belief. I will always believe that we live in the finest country in the world. That hard work and doing the “right thing” does matter and always will and that the strength of the human spirit with all its heart and courage and relentless hope is alive and well. These are just uncharted waters and it’s going to take us all a while to find safe harbor.
As far as your concerns about living in a small community and what sort of chatter might be going on about struggles you and your husband have been dealing with…f*#k ‘em! Not a very lady like sentiment I know, but I have NO patience or tolerance for gossipy, cowardly, judgmental people, nor should you. If they haven’t asked you about it directly, they have no business talking about it. If they feel the need to talk over the fence about your troubles…so be it. If they feel the need to have those downright neighborly conversations with nothing to go on but ignorance and innuendo…please reference above sentiment. Good people, working hard and trying with every fiber of their being to do right by one another and their family are in my heart and mind the very best kind of people. So try not to give the time of day, or even a minute of your life over to worry about what small people think, say or do. You will never change them so just put your heart and energy into things of true, real and deep importance. The rest will take care of itself.