View Poll Results: Is there a moral obligation to repay money you borrow?

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  • If you borrow money, you are morally obligated to repay it.

    110 34.48%
  • I feel no moral obligation to repay loans I've taken out

    209 65.52%
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Thread: Are you morally obligated to repay a loan that you take?[W:461]

  1. #681
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    Re: Are you morally obligated to repay a loan that you take?[W:461]

    Quote Originally Posted by tres borrachos View Post
    You are correct. People think that money charged off by their credit card company seems to disappear into the atmosphere. It doesn't. It gets passed on to the rest of the cardholders. Same thing with the mortgage defaults, and commercial loan defaults, and personal unsecured loan defaults, and so on.

    Defaulting on a loan is a bad thing for everyone. It surprises me how many people in this thread seem to think it's no big deal. It is.

    What people also don't realize is that it is very hard to get credit anymore as a consumer unless you have very good credit. People run into hardships - job losses, medical, kids issues, etc. that cause them to have a bump in their lives. That stays with you, no matter what the reasons. And because of the irresponsible borrowers, the standards that the lenders are expected to maintain have become much higher.
    And the bitching about that has already started with Obama having already calling for relaxing lending standards. It's like he didn't learn a damned thing. Judging from this thread, about half the country didn't learn a damned thing.
    You can't reason anyone out of a position they didn't reason themselves into in the first place.

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    Re: Are you morally obligated to repay a loan that you take?[W:461]

    Quote Originally Posted by tres borrachos View Post
    I don't subscribe to the idea that there is morality in lending, but technically this statement isn't quite accurate:

    If you entered into the contract in good faith, honestly answered the questions, told the truth about your earnings, etc. then you've fulfilled your moral obligation.


    If you default on your loan because you made bad business decisions or were not a good steward of your own money or you made bad personal decisions, then you haven't fulfilled your "moral obligation" (whatever exactly that may be by definition) just because you were honest in the application process.
    But what is "immoral" about bad business decisions? If your business fails, you're immoral, not a good person? Surely you don't believe that.

    And the "good steward" obligation applies as well to the banks, which made a loan secured by the residence. If the borrower defaults (and they should expect some will, for all kinds of reasons) they've failed as good stewards if the security doesn't cover the loan losses.

    I think if I was going to attempt to apply any morality to lending it would be to remind people that provisions for bad loans, and charge offs, and repossessions, and foreclosures, etc. end up costing everyone. Those moneys don't just get written off with a shrug of the shoulders. We all end up paying.
    I do agree with this to a point. If we all tomorrow decided that we'd strategically default, lenders would demand additional security, higher credit scores, whatever. But that's a group decision - if we all paid back loans, as a group, then perhaps our loans would be cheaper. Still not a moral decision - it's a decision grounded in self interest.

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    Re: Are you morally obligated to repay a loan that you take?[W:461]

    Quote Originally Posted by Papa bull View Post
    And the bitching about that has already started with Obama having already calling for relaxing lending standards. It's like he didn't learn a damned thing. Judging from this thread, about half the country didn't learn a damned thing.
    actually, no
    the federal bank examiners are being too conservative in many instances
    a bank with which i am well acquainted had a sterling loan portfolio when the great recession hit
    did not want or need a dime of bailout money
    yet the fed now looks at that bank's loans and disqualifies many from being disbursed, despite the bank's excellent history of loan origination

    banks like citicorp need such hand holding/ass kicking by the fed
    but all federally insured banks are being subjected to such unnecessary oversight
    in many instances, and to the dismay of working capital needy small businesses, the fed has over-regulated the regional lenders when it should instead be working with the too-big-to-fail banks and their loan origination/portfolio management policies
    we are negotiating about dividing a pizza and in the meantime israel is eating it
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    Re: Are you morally obligated to repay a loan that you take?[W:461]

    Quote Originally Posted by JasperL View Post
    But what is "immoral" about bad business decisions? If your business fails, you're immoral, not a good person? Surely you don't believe that.

    And the "good steward" obligation applies as well to the banks, which made a loan secured by the residence. If the borrower defaults (and they should expect some will, for all kinds of reasons) they've failed as good stewards if the security doesn't cover the loan losses.



    I do agree with this to a point. If we all tomorrow decided that we'd strategically default, lenders would demand additional security, higher credit scores, whatever. But that's a group decision - if we all paid back loans, as a group, then perhaps our loans would be cheaper. Still not a moral decision - it's a decision grounded in self interest.
    What's immoral about bad business decisions? You'd have to know what the decision is to answer that. Yes, I know people whose businesses failed because of stupid, irresponsible business decisions they made. They were under obligation to their creditors.

    Banks by law have to rotate appraisers so that they can't "rig" the appraisal amounts. Banks can't help it if the market value of a home declines. Banks always have provisions for loan losses and there is an expectation that some loans they make will default. That's always been part of lending. Risk management is a gigantic role in banking these days. Banks aren't stewards of collateral that's being pledged for loans though, no matter how you slice it. They are stewards of the deposit assets which are used for lending purposes.

    Self interest doesn't just motivates businesses. I do things for self interest (or familial interest) too. You don't?
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    Re: Are you morally obligated to repay a loan that you take?[W:461]

    Quote Originally Posted by justabubba View Post
    actually, no
    the federal bank examiners are being too conservative in many instances
    a bank with which i am well acquainted had a sterling loan portfolio when the great recession hit
    did not want or need a dime of bailout money
    yet the fed now looks at that bank's loans and disqualifies many from being disbursed, despite the bank's excellent history of loan origination

    banks like citicorp need such hand holding/ass kicking by the fed
    but all federally insured banks are being subjected to such unnecessary oversight
    in many instances, and to the dismay of working capital needy small businesses, the fed has over-regulated the regional lenders when it should instead be working with the too-big-to-fail banks and their loan origination/portfolio management policies
    Not in "many" instances. In almost all instances. That is an argument I have made repeatedly on this board that nobody ever seems to understand. I have said exactly that when debating about Elizabeth Warren and the CFPB, and Dodd-Frank. Community banks are subjected to the majority of the regulations that have been imposed on the top 5 lenders, and the community banks were not the ones who caused the crisis in the first place. As a result of that, the community banks - which exist to support the community, especially the small businesses in the community - are so heavily regulated that their credit requirements are close to being out of the reach of most of those same businesses that they supported for year. This also can easily be seen in the consumer side as well.
    Horse sense is the thing a horse has which keeps it from betting on people. ~W.C. Fields

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    Re: Are you morally obligated to repay a loan that you take?

    Quote Originally Posted by Declan View Post
    Not everyone will accept $1 at a time (and your late fees usually would put you so far in the hole doing that, you are better off being sent to collections anyways).
    I'm thinking borrowing from a person you know not, a financial institution.
    32 “Whoever acknowledges me before others, I will also acknowledge before my Father in heaven. 33 But whoever disowns me before others, I will disown before my Father in heaven.
    Matt. 10:32-33

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    Re: Are you morally obligated to repay a loan that you take?[W:461]

    Quote Originally Posted by Papa bull View Post
    I think we have a civic duty to help the poor and sick. Moral duties are to eschew wrong or "bad" acts. Immorality is "doing wrong". Apathy is "doing nothing". But I've said before and personally that I believe welfare is a necessary evil because letting people starve in the streets when we have the means to provide food would be immoral as a society.
    So, immorality is doing wrong, but morality isn't doing good? That is a kind of odd view conservatives often have. Not doing wrong is really only like 10% of the battle in my view. Like, I don't really think anybody can be patting themselves on the back just for not doing anything evil. Very few people really do much anything major wrong. The vast majority of suffering in the world isn't really caused by people doing something wrong so much as a lack of people doing good things.

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    Re: Are you morally obligated to repay a loan that you take?[W:461]

    Quote Originally Posted by tres borrachos View Post
    Paying fees required when you break a lease is not the same thing as defaulting on a mortgage. You paid your obligation.

    I don't subscribe to the idea that there is morality in lending, but technically this statement isn't quite accurate:

    If you entered into the contract in good faith, honestly answered the questions, told the truth about your earnings, etc. then you've fulfilled your moral obligation.


    If you default on your loan because you made bad business decisions or were not a good steward of your own money or you made bad personal decisions, then you haven't fulfilled your "moral obligation" (whatever exactly that may be by definition) just because you were honest in the application process.

    I think if I was going to attempt to apply any morality to lending it would be to remind people that provisions for bad loans, and charge offs, and repossessions, and foreclosures, etc. end up costing everyone. Those moneys don't just get written off with a shrug of the shoulders. We all end up paying.
    What if you default on your loan because the banks made a "bad business decision" by writing you a mortgage with payments you could never make? This was the case with most of the loans that defaulted during the bubble. Most States have laws prohibiting these loans that are called "predatory". The idea that the borrower is always at fault is preposterous. The banks were not honest in writing the loan and when a borrower questioned the ridiculously high payments that would "balloon" in 2 years, the brokers simply told them that you would refinance before that happened and get a even better rate because you would have equity. The truth is that in many cases the banks expected you to default and even made bets that paid off when you did.
    Last edited by iguanaman; 01-26-15 at 09:23 PM.

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    Re: Are you morally obligated to repay a loan that you take?[W:461]

    Quote Originally Posted by iguanaman View Post
    What if you default on your loan because the banks made a "bad business decision" to lend you money with a loan with payments you could never make? This was the case with most of the loans that defaulted during the bubble. Most States have laws prohibiting these loans that are called "predatory". The idea that the borrower is always at fault is preposterous.
    c'mon damn it
    the name of the game we are playing is 'blame the victim'
    now, get with it
    we are negotiating about dividing a pizza and in the meantime israel is eating it
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    Re: Are you morally obligated to repay a loan that you take?

    Quote Originally Posted by WCH View Post
    I'm thinking borrowing from a person you know not, a financial institution.
    Good luck getting them to accept your $1 a month payment and not do anything about it.

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