Out West, a college professor wrote a paper last year pondering the question of why people just didn’t walk away from their upside down mortgages. In his opinion, they should. He put forward the premise the majority refused to do so because they were “embarrassed” or filled with the “shame” associated with foreclosure.
These economic times hit Florida really hard. The unemployment rate in the Sunshine State is considerably higher than the national average. Many Floridians are struggling to make their payments and there is one constant among them: they continue paying their mortgages because they gave their word they would.
Floridians, like many in the nation, lost substantially when the stock market tanked. Disposable income completely disappeared. Now, there are some of the citizenry working very hard to make it from one month to the next – through no fault of their own.
They planned their finances carefully and bought housing they could afford. Many watch helplessly as their equity began to fall. They fretted through the weeks and months watching the news and keeping watchful eye over value of their homes. They calculated margins, they worried about selling, some finally decided to sell, and then could not. The market just was not there.
Now with the market dumped, too many are stuck and unable to move up, laterally, or down in size. Counties, planning on revenue from inflated home values, now face dire situations. As a result, local governments are scaling back police, fire, educational, and other services, sometimes at alarming rates. County and city management have to lay off workers in those governmental services. This of course, increases an already astonishingly high unemployment rate.
As more Floridians become unemployed, they will be unable to pay their bills and meet their mortgage and other obligations. Mortgage companies will feel the squeeze and they, too, will also have to look at the personnel downsizing issue – just for survival of the company.
And then along comes a liberal college professor, who essentially advocates walking away from mortgages for those who are upside down and behind in their payments. He believes and puts forward the idea of the masses being unwilling to walk away because of the “embarrassment and guilt” associated with bankruptcy and foreclosure.
In his research, he overlooked one important aspect about why most will not walk away: personal responsibility. Floridians, those of who live here, love the land, and are serious about things such as life, are not willing to go back on their word. Once they have made an agreement, most stick by it. It is their integrity and their sense of responsibility which compels them to continue making payments on their loans when others have stopped.
After all, one’s reputation is only as good as their word.