Quoted:
OK, I'll happily play double Devil's advocate here.
On a philosophical/ethical level, what "ethical" obligations does the bank/lender maintain to you? I'd argue, none. First, as a non-human, its basically by definition an amoral actor. Second, the actual duties and requirements of the lender are spelled out in law and regulation.
You are not in a "ethical" relationship with the bank. Any ethical considerations cannot be reciprocated.
Second, the bank/lender entered into a relationship with you in a fair, "arms length" manner. You had a requirement, and the bank had a product. If you fail to meet your obligations, the bank has recourse. If the bank fails to meet its obligations, you have recourse.
Really, are you under some moral and ethical obligation to hold onto stock that fallen in value? To only sell a car for its KBB value, not more or less? To not use coupons?
You are in a business relationship predecated on the ability of the lender to provide money and you to pay it back. There are consequences for both parties if they fail to meet those obligations.
I'm not saying that its right or good to walk your mortgage. I am saying that any morality you put on the action is misplaced. Its not a moral issue. Perhaps its a legal one, if fraud or deception was used to secure the loan in the first place, but even then, the lender has all sorts ways to cover that base.
You are 100% correct. What most people don't understand is that 99% of the lending institutions leveraged your mortgages, all of them, not just the high risk loans, to make even more on top of the interest they charge you using foreign investors. They didn't cut us in on that piece of the pie did they? Where is your half, they sold your obligation to pay your mortgage as securities overseas. What got us into the hot water was when they gave out loans to anyone to get more mortgages to sell. However, when the deal went sour guess who got to pay? Yup, we did, with our tax dollars and the bailout. This is exactly what the bailout was about. And we didn't just pay for the sour investments here, we paid all the firms overseas that lost money too. Basically the US taxpayer got the screws while the New York mortgage bundlers and your mortgage holder made a shit ton of extra money. They made great big bonuses on top of their six figure salaries.
To top it all off, none of it was legal. The banks totally breached our mortgage contracts, they broke a shit ton of mortgage laws doing it. They continue to do it today. Now they have unlimited bailout money from the Treasury Dept. that does not need approval from congress... in other words we will not be privy to future bailouts. You can thank the last "financial reform" Dodd-Frank that got shoved through last year for that one.
I feel no obligation to any bank, they are snakes and will slit your throat in a heartbeat as long as they can get away with it, legal or not. It's like saying lying in a poker game full of liars is unethical.
If backing out of a mortgage with these bandits will improve your situation do not hesitate based on moral obligations, you are nothing but $$$ to them.