Foreclosure and the Aspect of Morality - Essay Example

A voluntary foreclosure is a foreclosure proceeding initiated by a borrower, instead of a lender, in an attempt to avoid further payments. This allows for a lender, in the event that there is a loan default, to have the mortgaged property sold as a way of covering some or all of the remaining debt. Involuntary foreclosure, on the contrary, involves a borrower defaulting on their home mortgage loan and the lender initiates proceedings to take the possession of the house and use its sale as a way of recovering debts. The borrower remains liable for the full amount of the debt, such that if they sell the house for less the amount owed by the borrower, it may force them to pay the remaining balance. This paper expounds on the morality aspect of foreclosure, stating that voluntary foreclosure is justified while involuntary foreclosure is unjustified.

Reasons

Both borrowers and lenders are trying to make money. The lender will seek to gain financially from selling the property and no one complains of its immorality. The morality of business allows the borrower to reasonably attain the utmost advantage from their property as possible (Hagerty, 2009). What happens when the property loses its value? What moral incentive allows one to proceed with chasing a valueless acquisition? There is none whatsoever. In a bid to make as much money, each seeks to take the alternative that suits them best. If the property loses value, the borrower may tend to voluntary foreclose the property and this is morally justified.

Too many foreclosures in one area form a dangerous place to live, even for those who are paying their bills (house payments). Someone has mainly related the main reasons for foreclosure to displacement, crime issues and shattered credit scores (Rhodes, 2008). Is it moral to advocate for an individual who has been displaced from a certain region to continue paying out for a property to which they have lost ownership? Absolutely not! The moral aspect is to let the family or individual to rebuild their lives while sympathizing with their predicament (Weitekamp, 2011). Crime is a social ill that few can tolerate. If a neighborhood becomes infested with criminal activities, is it moral to risk one’s life in such a neighborhood? The answer again is logical NO. In a severe recession, some people might be trying to pay their bills but still can't because they lost their jobs. Thus, further economic hardships that have hit many people have made even renting a premise more costly than it was 3 years back. The whole recession situation has made it more difficult for people to get jobs, further straining their incomes and lifestyles (Lowenstein, 2010). Thus, as a morally upright individual, the borrower forecloses the deal to avoid pressurizing them further.

Explanation

I believe that voluntary defaults or strategic defaults have become an increasing affair in America nowadays. Long gone are the days when people would do all they could to pay their mortgage and satisfy their legal and financial obligations. The fact that many believe that business and the world in general is amoral does not justify the reason for people to abscond their duties and obligations (Walker, 2003). Despite the house prices falling and the owners left with houses that cost less than their true value, the lender left owing should fulfill their end of the bargain. However, some have resulted in a calculated decision where they choose to hang on to their money while letting their houses go. The reason this is not immoral is the fact that the voluntary bit comes after weighing one’s options and the benefits of the property to be acquired.

It would be moral if empathy were a part of human reasoning. Situations that one may not be able to handle should not be taken as an immoral way of making another to lose their livelihood. If one is not able to pay their mortgage and voluntarily requests foreclosure to be pursued, it would be moral to let them take the credit card hit rather than let them strain and suffer (Bisenius and Mac, 2010). It would defeat the whole essence of morality to not allow one to follow their cause. With the increasing number of hardships that come with the nose-diving economic times, someone should not view skeptically such tendencies. Instead, it is better for one to appreciate the honesty that comes with voluntary foreclosure while condemning defaulters.