It's a comment that's coming up over and over. To make my position clear, I think that if it were generally recognized that people felt no obligation to pay their mortgage if the house was underwater, it would be perfectly fine to walk away even if you could pay; I think it's not fine because the mortgages were issued under a tacit understanding that people do try very hard to pay their mortgages, even when it's hard.
Moral questions aside, residential mortgage terms are based on the assumption that most people will try to pay their debts. If you want to see what mortgages would look like if lenders assumed that the borrowers will default the first chance they get, look at a commercial loan. Would a mortgage be better for a consumer if:
The borrower had to give the lender a statement of cash flow and net worth every quarter?
The property value had to be above a minimum loan-to-value ratio?
The borrower had to maintain an income at some multiple of the monthly loan payment?
The borrower had to maintain a minimum net worth?
The borrower could not make significant changes to the property without lender consent?
Everything had to be personally guaranteed?
Just as a positive matter, mores tend to be cheaper than laws and contracts.
Commercial lending terms have traditionally required much higher loan-to-values--think 30-40% downpayments--in order to shield the lender from underwater borrowers who want to walk away. (Though as in the residential market, these were considerably relaxed at the height of the bubble). Other terms also tend to be more onerous. If "walk away as soon as it's underwater" becomes more widespread, you can expect to see some of these things spread to the residential market--not just making loans harder to get, but making them considerably more expensive and annoying for the homeowners.
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