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To: SteveinTX who wrote (107677)	2/1/2010 6:01:57 PM
From: Perspective	Read Replies (2) \| Respond to of 116555

< It seems to imply that underwater homeowners shouldn't be held to their contractual obligations because the the banks they contracted with are all scumbags themselves.> Actually I thought it was saying that the contract specifies what is required, and what the consequences are for failure to comply. A rational participant should evaluate if the consequences of failure to comply are more or less severe than the consequences of compliance. While Paulson and his ilk regularly break contracts because it is economically favorable, they wag their fingers at individuals who would do the same. While I agree that most of these underwater homeowners should have never taken out the loans, now that they have them the best course of action for them is generally to walk away. Your credit rating simply isn't worth that much (as Donald Trump could tell you). You and I would not do business with them again, but some fool banker playing the game with the public backstop will gladly lend to them. BC

To: SteveinTX who wrote (107677)	2/1/2010 6:05:54 PM
From: Webster Groves	4 Recommendations Read Replies (1) \| Respond to of 116555

We are talking contracts, not hypothetical moral obligations. Mortgage contracts contain clauses that if the mortgagee fails to make payment, the mortgage holder can foreclose and seize the property held as collateral. OK, that's a contract. For a 20% down mortgage in a normal market, it makes sense, too. But for a 0% down mortgage in a bubble market, it is a risky bet for the mortgage holder. Nevertheless, it is a contract, and the mortgagee has the legal right to walk away and forfeit his equity should he choose. As long as the terms of the contract are adhered to, all promises have been kept, and the courts should enforce that fact. wg