Again, I don’t begrudge contractual parties re-negotiating their loans. What I do lament is the double standard where people at cocktail parties (or even braver than tequila drinkers, internet commenters operating in the dead of night from their couches) try to shame homeowners who, largely powerless, and after all else has failed, choose strategic default. Professor Brent White of UofA Law has discussed this better than me (links and posts below).
This narrative is tired. Yes, homeowners bear responsibility but so do the lenders. The doctrine of efficient breach is a valid one. Lenders price non-recourse default into the loans. My main point: sophisticated parties do this all of the time. See, e.g., Mortgage Bankers Association defaulted on some of its own obligations, after shaming borrowers.
This week: DMB has defaulted on DC Ranch Marketplace here in Scottsdale, as reported Thursday in the Arizona Republic. What do they want? A modification of their loan to reflect declining values. Sound familar?