Monday, April 28th, 2014
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"Occupy My Condo"

In which we re-answer questions sent to The Ethicist.

YOU DO YOU
I know of someone who has lived mortgage-free for three years while the bank foreclosed on his apartment. During that time, the man paid his monthly maintenance to the building but did not pay his mortgage. His rationale: He had been in the furniture business and lost much of his income with the financial crisis, and not one of the bankers responsible for the meltdown has gone to jail. And furthermore, as a result, his apartment was worth less than he paid for it. Does any of that matter? Is strategic loan default ethical? NAME WITHHELD

You're a nosy one aren't ya!

But your actual question is about the ethics of loan default, and whether it may be done "strategically." Nowhere do you reveal, or reveal that you know, a "strategy" on the part of this withholder. That's a canard anyway—would your question be different if this non-payer was "strategically" seeking to keep his adorable wee children in bread and water?

The bank is free to seek repair for its harm as it wishes. Presumably it is, as all institutions slowly and surely do. But this person's building remains funded and presumably solvent; a most ethical choice. By what other means should we express disgust at companies like Bank of America, who are literally so bad at doing their jobs that they can't even do their accounting right? Who are so bloated that they can accommodate a $4-billion math mistake without blinking? Someone should pay, and they seem prepared to. After all, they're going to have to cough up something like $15 billion, on top of $9.5 billion they'd already been forced to eat, oh and on top of another almost-billion dollars over their whole deceptive services thing.

To hell with Chase, Citibank and Bank of America! If your acquaintance really had his act together, he'd be making his mortgage lender pay him. The very least he can do to make things right in the world is to withhold his payments.

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Email queries to ethicist@nytimes.com, or send them to the Ethicist, The New York Times Magazine, 620 Eighth Avenue, New York, N.Y. 10018, and include a daytime phone number.

1 Comments / Post A Comment

I see it as two choices, as stipulated in the mortgage fine print: pay your mortgage and live in your house as long as you want, or don't pay your mortgage and live in your house as long as it's yours. If you're going to be thrown out, there is no sense in paying 'what you can', crippling your finances in a way that either might bankrupt you or at least affect your financial well-being for a much longer period of time. Just be prepared for when the eviction notice comes.

I see it less of a 'punish the evil banks' thing, and more of a responsible financial choice. By the way, though… had the housing market been stronger, you can bet the bank would have foreclosed right away. They let the owners during the recession slide for a few years because foreclosing on all those houses would have been a financial disaster for the banks. Sure they wished everybody paid, but in return for not foreclosing, they got people living in the houses who kept the rats out, watered the lawn, and generally LIVED there during a period where they could not have sold the house. Win-win.

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