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

Is there a moral obligation to repay money you borrow?

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

    Votes: 91 92.9%

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

    Votes: 7 7.1%
  • Total voters
    98
justabubba said:
so, that bank, the one that made a loan so you could be upside down in a home by $30,000, is the more moral party
doesn't matter that your moral bank sold that potentially upside down loan to an investor to avoid risking the loss it anticipated because it had statisticians and economists on staff to better anticipate the economic downturn than you
and when you ponied up the additional $30,000 in the belief it was the moral thing to do, you aided an investor with whom you had no dealings and who held your Note without your approval or consideration
now, share with us what you got for that $30,000 you needlessly gave over to that secondary market investor
in short, you made a terrible business decision
could it be that you are trying to find some justification in order to salve that expensively bad business decision
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It's not the bank's fault that the property values where you live dropped to the point that your home is underwater. It's not the bank's fault that you paid more for the home a few years ago than it is worth today. How do you rationalize that sticking it to the bank is OK when you chose the home and you agreed to the terms of the loan? They didn't do anything wrong, but you're arguing that you should stick them with your bad decision anyway because... what exactly was that rationalization again?
 
whysoserious said:
Did the bank live up to its obligation? Is it moral to swindle people?
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Two very unrelated questions. If the bank wrote you the check and lived up to the terms of your agreement, the bank didn't swindle you. If the bank swindled you, then you might have an argument that you don't have a moral obligation to do what you agreed to do, but you can't prove that the bank swindled you just because you say that "banks swindle people". You actually have to prove they did something dirty, dishonest and designed to cheat you out of your money.
 
Papa bull said:
Two very unrelated questions. If the bank wrote you the check and lived up to the terms of your agreement, the bank didn't swindle you. If the bank swindled you, then you might have an argument that you don't have a moral obligation to do what you agreed to do, but you can't prove that the bank swindled you just because you say that "banks swindle people". You actually have to prove they did something dirty, dishonest and designed to cheat you out of your money.
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yes, that bank that made the loan to you so that it could immediately sell it off to the secondary market to make a quick profit, despite having professional insight to anticipate the economic downturn
that moral bank which threatened ratings agencies with withholding additional business if they did not place a favorable rating on that unfavorable paper
that moral bank which threatened appraisers with withholding additional business if they did not place a favorable market value on that real property everyone knew was without the true value to support the mortgage being processed
that moral bank, the one holding secondary paper, and being without the instruments of hypothecation to legally initiate the foreclosure process instead fabricated the legal signatures it needed
sell that **** somewhere else; no reasonable people are buying the presentation that the banking industry was morally superior during the great recession
 
iliveonramen said:
It's actually nothing like that.
The argument is that contracts include both and outline and a penalty for a breach of contract. In either case, both parties will act in their best interest.
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It is exactly like that. There is no contract for "penalty for breach of contract". The contract is for a promise from the borrower to pay the lender.

By the way, cell phone agreements are not loan agreements, so the moron at law school who tried to draw a parallel there too really doesn't understand what he was talking about.
 
Papa bull said:
I know you would stick someone else with the consequences of your bad decisions. You've said that all along. That was never in dispute.

You are one of the people that will do what is profitable for you instead of what is right. That is unethical and I wouldn't knowingly associate or do business with people who would do that. I will only willingly associate with people who do ethical business.
Click to expand...

I said "I as a business entity," not "I as a person." Business entities have responsibilities to their stakeholders, and that means minimizing the effects of bad decisions that cost the business money. Get over it.
 
tres borrachos said:
It is exactly like that. There is no contract for "penalty for breach of contract". The contract is for a promise from the borrower to pay the lender.

By the way, cell phone agreements are not loan agreements, so the moron at law school who tried to draw a parallel there too really doesn't understand what he was talking about.
Click to expand...

He was talking about contracts. A loan agreement is a contract.
 
justabubba said:
for purposes of discussing the topic of this thread, the morality of financial repayment, the link should be obvious
Click to expand...

The topic of this thread is this:

Are you morally obligated to repay a loan that you take

You don't understand the difference between a loan and a service contract?
 
iliveonramen said:
He was talking about contracts. A loan agreement is a contract.
Click to expand...

The loan agreement is the promise to repay. Period. Whatever remedies are written into a loan agreement - none, I'll take all your business assets, I'll foreclose on your home, etc. - don't change that the sole purpose of a loan agreement is to outline the repayment terms a borrower agrees to. That's it.
 
justabubba said:
yes, that bank that made the loan to you so that it could immediately sell it off to the secondary market to make a quick profit, despite having professional insight to anticipate the economic downturn
that moral bank which threatened ratings agencies with withholding additional business if they did not place a favorable rating on that unfavorable paper
that moral bank which threatened appraisers with withholding additional business if they did not place a favorable market value on that real property everyone knew was without the true value to support the mortgage being processed
that moral bank, the one holding secondary paper, and being without the instruments of hypothecation to legally initiate the foreclosure process instead fabricated the legal signatures it needed
sell that **** somewhere else; no reasonable people are buying the presentation that the banking industry was morally superior during the great recession
Click to expand...

Holy **** - what on earth are you saying here?

Banks have been selling on the secondary market for decades, many decades. You of all people should know that community banks particularly do it and have made it a business practice, and it has nothing to do with making a quick profit and knowing that the market what going to tank.

This is propaganda and as I suspect you also know, VERY few lenders who wrote conventional mortgages for qualified borrowers always writing to Fannie standards as they always did had nothing - zero - to do with what was going on at the very large banks and the lenders like Countrywide. And if you're in this business as you said earlier that you were, you would also know that it wasn't most of the banks who worked with the appraisers in that way, and it was in fact only a handful (again) of large banks and the non-depository lenders.
 
tres borrachos said:
I will share the call reports of 5 banks within 40 miles of where you live to prove you wrong.

What county do you live in?
Click to expand...

Do all 5 of those banks have a consolidated deposit schedule that shows a greater total than their consolidated loan schedule? Because nothing less is acceptable.

Use the SF/SJ/Oakland metro area: if you can find it anywhere, you can find it there.
 
Lursa said:
I had to leave the thread. The way people tried to rationalize and justify their reasons for not (necessarily) paying showed they used excuses in life to prop up their behavior. Ignoring the fact that cheating, fraud, and non-payments are not included in business models and spread out so that everyone else had to pay for their defaults. Rationalizing that 'big business didnt feel it' or 'it was too small for people to notice.'
Click to expand...

The responses in this thread make my head hurt. And scare the **** out of me.
 
DifferentDrummr said:
Do all 5 of those banks have a consolidated deposit schedule that shows a greater total than their consolidated loan schedule? Because nothing less is acceptable.

Use the SF/SJ/Oakland metro area: if you can find it anywhere, you can find it there.
Click to expand...

Beneficial State Bank in Oakland.

https://www2.fdic.gov/idasp/StruReportNew.asp?inCert1=58490

Metropolitan Bank in Oakland.

https://www2.fdic.gov/idasp/StruReportNew.asp?inCert1=25869

Here are 2 to get you started.
 
Papa bull said:
It's not the bank's fault that the property values where you live dropped to the point that your home is underwater. It's not the bank's fault that you paid more for the home a few years ago than it is worth today. How do you rationalize that sticking it to the bank is OK when you chose the home and you agreed to the terms of the loan? They didn't do anything wrong, but you're arguing that you should stick them with your bad decision anyway because... what exactly was that rationalization again?
Click to expand...

Part of the problem is you've never once attributed any blame to the banks. I can only figure you're a banker or they're your friends/family.

The obvious corollary to that part bolded is the bank also agreed to the term of the loan and accepted that house as adequate collateral for extending you a subprime, liar, NINJA, negative amort, 110% of value, ARM etc. loan that had approximately zero margin for the borrower. They made tens of thousands of bad decisions to loan money on bubble home prices to questionable borrowers because it made them WEALTHY at the time. Borrowers have a one way moral obligation to bail them out of those stupid lending decisions?

BTW, it's also not the borrowers fault that home prices dropped and that the loan is underwater, and when the bank agreed to your home as collateral, it accepted the risk of home values dropping. You're pretending the borrower has a MORAL obligation to bear the entirety of that risk. Not sure why.
 
tres borrachos said:
It is exactly like that. There is no contract for "penalty for breach of contract". The contract is for a promise from the borrower to pay the lender.

By the way, cell phone agreements are not loan agreements, so the moron at law school who tried to draw a parallel there too really doesn't understand what he was talking about.
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What is the principled difference? We only have "moral" obligations to repay loans, but not other amounts due under other types of contracts?
 
JasperL said:
What is the principled difference? We only have "moral" obligations to repay loans, but not other amounts due under other types of contracts?
Click to expand...

Why are you bothering me? Two things I've already said to you:

1. Your posts are far too stupid for me to waste my time on.
2. I said repeatedly that there is no morality in borrowing and lending.

If you want to talk to someone about the moral obligation to pay your cell phone provider for your service agreement, find someone who is interested. I'm not. And it's off topic. This thread is about borrowing and lending.
 
Papa bull said:
It's not the bank's fault that the property values where you live dropped to the point that your home is underwater. It's not the bank's fault that you paid more for the home a few years ago than it is worth today. How do you rationalize that sticking it to the bank is OK when you chose the home and you agreed to the terms of the loan? They didn't do anything wrong, but you're arguing that you should stick them with your bad decision anyway because... what exactly was that rationalization again?
Click to expand...
Still ignoring that the lendee was paying for MORTGAGE INSURANCE.

Why do you have 2 threads on this very same topic?
 
tres borrachos said:
VERY few lenders who wrote conventional mortgages for qualified borrowers always writing to Fannie standards as they always did had nothing - zero - to do with what was going on at the very large banks and the lenders like Countrywide. And if you're in this business as you said earlier that you were, you would also know that it wasn't most of the banks who worked with the appraisers in that way, and it was in fact only a handful (again) of large banks and the non-depository lenders.
Click to expand...

So does it change the moral obligation if the lender did behave unethically, jacking up appraisals and all the rest? If so I agree it makes a difference and I suspect but haven't seen the data that those lenders who stuck to their traditional business model were largely unaffected by strategic defaults and all the rest that started this discussion. It's part of the golden rule approach I've taken to this issue.

And using that standard lenders who found every method to get those loans approved so they could rake off their cut of fees, transfer the default risk like a scalding hot potato on down the line, and pay large bonuses all around at each stop are due zero "moral" obligation to bail them out of their reckless approach to lending $hundreds of thousands to questionable borrowers, which is the identical moral concern they showed their customers and clients along the way. To me for those lenders, it's like arguing an antelope has a moral obligation to the hyenas who circle the herd preying off the weak.
 
JasperL said:
Part of the problem is you've never once attributed any blame to the banks. I can only figure you're a banker or they're your friends/family.

The obvious corollary to that part bolded is the bank also agreed to the term of the loan and accepted that house as adequate collateral for extending you a subprime, liar, NINJA, negative amort, 110% of value, ARM etc. loan that had approximately zero margin for the borrower. They made tens of thousands of bad decisions to loan money on bubble home prices to questionable borrowers because it made them WEALTHY at the time. Borrowers have a one way moral obligation to bail them out of those stupid lending decisions?

BTW, it's also not the borrowers fault that home prices dropped and that the loan is underwater, and when the bank agreed to your home as collateral, it accepted the risk of home values dropping. You're pretending the borrower has a MORAL obligation to bear the entirety of that risk. Not sure why.
Click to expand...

Because the bank isn't buying your house. You are buying the house. The house is YOUR investment.
 
Papa bull said:
Because the bank isn't buying your house. You are buying the house. The house is YOUR investment.
Click to expand...
The bank OWNS the home until you make the last payment, and until you have over 20% equity, you have mortgage insurance, so if there is a default prior to 20% equity, the bank is made whole.
 
tres borrachos said:
Why are you bothering me? Two things I've already said to you:

1. Your posts are far too stupid for me to waste my time on.
2. I said repeatedly that there is no morality in borrowing and lending.

If you want to talk to someone about the moral obligation to pay your cell phone provider for your service agreement, find someone who is interested. I'm not. And it's off topic. This thread is about borrowing and lending.
Click to expand...

Why are you in a thread discussing the moral obligation of paying off a loan? The "moron at law school" made a simple case. I'll quote it:

Though a mortgage contract is more substantial than a cell phone cont*ract, it’s no different in principle. Like a cell phone contract, a mortgage contract explicitly sets out the consequences of breach.

In other words, the lender has contemplated in advance that the mort*gagor might be unable or unwilling to continue making payments on his mortgage at some point—and has decided in advance what fair compensation would be.
Click to expand...

The problem is you're too "stupid" to grasp that simple point, or explain in any kind of way that makes sense where his argument is faulty or what principle distinguishes some contracts such as cell phones or leases from loans.
 
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