It is not fraud:

It is not fraud to default on a loan or to walk away from a loan. It is an option that is legal and falls within the guidelines accepted by the lender. The lender has agreed to take the property as collateral, in the event of a default they can exercise their right to foreclose and take back the property.


I don't understand why so many people want to make contracts unilateral and have everything be in favor of the bank. The bank willingly gave out the loan and willingly accepted the appraisal, and willingly accepted the home as collateral.

It is well within the homeowner's rights to walk away from a losing investment. Businesses and companies do it everyday. They go out of business or they restructure. These things are inherent in an economy where risk has to be taken in order to increase economic activity.

When a home is encumbered by a mortgage worth twice the value of the real estate, it is a losing proposition. The mortgagee and mortgagor both made wrong decisions when they signed the contract. It makes absolutely not logical sense to expect the homeowner to carry that burden and be expected to be the only one to take the loss. I am tired of hearing people just make outlandish statements about the home owner who is just exercising their right to exchange their collateral for release from the note.

The banks have been bailed out and kept afloat by the taxpayer. It is not out of the question to believe that if banks were in an investment that left them upside down, they would be the first to walk away if they weren’t supported by government funds. We are in this situation in part because the banks have never had to truly accept any losses. Even now, when it is clear that they have committed the fraudulent activity, been lax in procedural standards, and are clinging to the notion that a homeowner should be expected to collect the full value of a loan that is 200% of the property value, banks are getting a free pass from the government and the people.

The financial system purposefully created a system that was difficult to understand. They leveraged themselves to the hilt, cashed in billions and accepted payments for CREDIT DEFAULT SWAPS in which they new they could never cover payouts in event of a default.

The homeowner is no committing fraud. Furthermore, the homeowner probably could afford their home 3 years ago when they had a job and expected to keep that job. Not many people can pay a mortgage from their savings for two or three years without a solid income. The unemployment levels even make it difficult for people who keep their jobs or businesses. The wages and profits are less when the economy falters.