Trust has always been a foundation for the lending business. Banks make loans and trust that people will tell us the truth and pay us back. It sounds old fashioned but we rely on that personal commitment in our business. The national residential real estate nightmare is having a profound effect on trust. People see large companies walking away from their obligations and declaring bankruptcy with the express intent of not paying back loans. Some banks seem to have been rewarded for their risky behavior. People ask, why not me? Why should I continue to pay a loan where I own more than the property is worth? Why don't I just stop paying and find another house at today's reduced valuations? My neighbor just walked away from his house, why shouldn't I? This trend will have a significant impact on the availability of credit in the future. It will also be a revealing indication of the values that serve as a foundation for our society.
Read more, article: Walk Away from Your Mortgage! from The New York Times.