Is It Okay To Walk Away From a Mortgage?

strategic-default-in-foreclosureAs a financial counselor, I have people in my office all the time who are underwater on their mortgage and looking for ways to get out, even when they have the ability to pay (strategic default). In 90% of the cases, they took on too much house or poorly managed their finances and feel they can no longer pay. They see many of their friends finding ways to buck the system when their house took a dive and they want me to give them permission to jump ship.

Here’s what I tell them:

What Does The Bible Say?

Whenever in doubt, go to the source for the answer. The Bible is absolutely packed to the gills with warnings about taking on debt and not paying it back.

  • “The wicked borrow and do not repay…” – Psalm 37:21
  • “Let no debt remain outstanding, except the continuing debt to love one another.” – Romans 13:8
  • “The rich rules over the poor, and the borrower is the slave of the lender.” – Proverbs 22:7
  • “It is better that you should not vow than that you should vow and not pay.” – Ecclesiastes 5:5

So, the Bible is pretty clear on the subject. But we humans are great rationalizers. We can believe God’s word, read it plainly and still say, “But my situation is different! You don’t expect me to adhere to the Bible in this economy, do you?” My answer to this is always a resounding “yes”.

Christians are called to live a radical lifestyle that is set apart from the world’s. This separation from the world’s way of doing things is what defines us as creatures who know where our future lies. Sadly, the American Dream has crept its way into our theology and the church and Christendom have suffered as a result. We’ve become comfortable fish in gilded tanks, swimming in circles, passing the time until death.

Sometimes being a Christian means we have to do hard things while everyone else takes the “easy” road.

Still not convinced? Don’t believe in the Bible? Allow me to make another argument; one taken from my pal Clive Staples Lewis.

Is It Ethical?

In his book, Mere Christianity, author C.S. Lewis proposes that difficult moral and ethical questions must be considered on 3 levels, corresponding to 3 separate ethics:

  1. The social ethic, regarding my relationships with others,
  2. The personal ethic, regarding what goes on in my mind and heart,
  3. The normative ethic, or metaphysical ethic dealing with greater meaning and purpose.

Using these criteria, let’s judge the decision to walk away from a mortgage:

It’s socially unethical. Why? Isn’t the only harm caused to your neighbor the devaluation of their property as a result of your default? Not necessarily. The promissory note you signed will become worthless and chances are, the government will buy it at full value from the holder, leaving millions of Americans with the bill.

It’s personally unethical. When you took on the house, you promised (vowed – Ecc. 5:5) to pay. Period. There was no stipulation for the state of the economy or insurance that the property would go up in value. It also says that the form of payment is money only, not collateral. The bank would never have agreed to the loan with the understanding that a deed to the property would constitute payment in full.

It’s normatively unethical. Strategic default goes against the virtue and character of Christ. His life and teaching consistently called men and women to follow the word of God, regardless of what the culture was up to. There is no indication that walking away from his promise to mankind was an option for him, even if it meant pain and suffering.

What do you think? Is it ever okay to walk away?

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