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A Happy Face on Foreclosure?

There’s an interesting article over on NPR–a lengthy discussion of the disheartening climb in foreclosure rates, and some “progressive” ways of dealing with these situations. The springboard for the column is the reporting of companies who seemingly are encouraging hard-hit borrowers to just walk away from their commitments.

The Web site for You Walk Away is cheery and reassuring. There’s a photo of a happy family in a park, smiling. Another family, also smiling, is packing up boxes.

Sometimes, they say, walking away from your mortgage makes economic sense, especially for homeowners who find themselves “upside down” — that is, they owe more on their mortgage than their house is worth. In those cases, “voluntary foreclosures are not by themselves evidence of a newfound irresponsibility on Americans’ part,” says Nicole Gelinas, writing in The Wall Street Journal .

Separating the economics of foreclosure from the morality (and the stigma) is not easy, though.

“We need a culture of responsible consumers and homeowners,” says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling, echoing a deep-seated American belief that one should always honor financial obligations.

I’m wondering how you feel about this. Except in extreme cases, I have a problem with people walking away from their debts. Even in those situations where it seems the only solution is for a person to file for bankruptcy, I’m of the opinion that honestly incurred debts should be paid. It might take many years, but doesn’t honesty and integrity demand that?

What say you?


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