As we start another year, I’ve been thinking about the decisions so many of us must make about our futures. Should we move to find more opportunity even if our hearts remain in the place we live? Should we stay in our homes even if they will never be worth what we owe on it? What is the right thing to do?
When American Airlines filed for bankruptcy at the end of last year, it was a strategic business decision which will allow the corporation to reduce its debt and cut its operating costs. This could be considered a smart business decision, made in order to stay in business.
There is really no stigma attached to these kinds of corporate decisions. Yet for millions of homeowners who owe more than their homes are worth, a different standard seems to be set for them. Like American Airlines, many homeowners can continue to pay their bills, including their mortgages. Yet their economic situation would be much improved by divesting themselves of the nonperforming asset – the house.
Corporations walk away from real estate obligations all the time. In an especially ironic example, the Mortgage Bankers Association, whose president has gone on record saying defaulters are sending the wrong message “to their family and their kids and their friends,” did a short sale on its corporate headquarters. The question may be, should homeowners think more like banks and focus on the bottom line?