More mortgage trouble predicted if consumers decide to steal

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Some real estate and mortgage experts say that the mortgage industry hasn't hit bottom yet, because here's what's up next: Consumers with prime mortgages bailing out on their financial obligations. If these consumers with good credit and the ability to pay their mortgages don't make good on their loans, there could be a whole new wave of financial problems in our economy.

California is probably in the worst shape of any state. Real estate prices surged there in recent years, but then the values of homes also fell very quickly. The California real estate market was hit hard as subprime borrowers defaulted. But there is a belief that prime borrowers will soon decide to stop paying their mortgages as they see their real estate values dropping.

This makes no sense to me, because in my world, people pay their debts regardless of whether it's a "good deal" for them or not. Simply put, these homeowners purchased properties at prices they agreed to. They signed papers agreeing to pay back the bank for the money loaned to purchase the house. If the house has now lost value, it's not the bank's fault, and it doesn't do away with the fact that the consumer promised to pay!Consumers who decide to be dishonest and ditch out on their mortgages will be happy to know that there are even companies that will help you make the most out of your planned foreclosure. They'll advise you on how long you can still live in the house without paying the mortgage and give you other useful tips. (I'm not linking to them today for obvious reasons... this company is helping consumers be cheaters.)

I think the idea of not paying a mortgage and forcing the bank to foreclose is shameful and it is stealing. The fact that a house may not be "worth" as much as you want it to be... or the fact that you don't have any "equity" in it... does not make it right. People telling homeowners to do this because it's "in their best interest" should be ashamed of themselves. After all... it's not "in my best interest" to pay any of my debts or keep any of my promises, but I do it because it's what's right.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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