Debating the Ethics of Foreclosure

I spent all weekend packing and moving stuff. There is not much left in the apartment as of now, it is very empty. One week to go until the big move. Hopefully blogging will not be interrupted for too long!

Observations from the Superbowl:
A tip of the hat to the New York Giants. They never quit and the pressure they were able to generate was stifling. Great job and a hard fought win.
As for the Patriots, the game was a debacle from start to finish. I figured after a terrible first half, they would make the simple adjustment of using the 5 wide receiver set that they have USED ALL SEASON and spread out the Giants to lessen the pass rush. Instead the Pats stayed in a basic set and were unable to do anything at all offensively. The offensive coordinator should be fired. The magic that the Patriots have enjoyed is now gone, and I fully expect this loss to finish the superbowl runs that they have had. Very disapointing.

Anecdotal Observations
Over the weekend and today I had the opportunity to observe some housing related companies up close. General observations are always subject to many variables, but I offer what I saw for what it is worth:
Home Depot - We bought a new fridge to replace the 1970's appliance at the house we are moving into. The Home Depot store was absolutely empty. I have been in this particular store many times and it is always packed. The sales associate was very nice and knowledgeable, and after some prodding said that yes, things have been very slow for about 6 months.
U-Haul - I scheduled a moving truck rental for this Saturday using the online feature that U-Haul offers. About 30 seconds after I submitted the request, I had a phone call from the U-Haul location I am renting from to confirm my order and try to sell me boxes and packing materials. 30 seconds? Either they are on top of things or they were not very busy at all.

Taken together these two events may or may not mean anything. I imagine them to be signs of a slowdown that has been going on for a little while now.

Debating the Ethics of Foreclosure
Readers of this blog are well aware of the record (and still climbing) foreclosure numbers that have become a real issue. In both the mainstream media and the financial blogosphere I have begun to notice a debate brewing about the ethics of foreclosure. As the housing mess continues to worsen I think this debate will escalate.

It has been reported that major banks and lending institutions are perplexed by the new paradigm of mortgage default. In the past people would pay their mortgage first, and let things like car loans and credit card bills go unpaid. The problem now is that people upside down on a mega mortgage, faced with even more price declines, is opting to just pack it in and leave the home to foreclosure. I think the banks need to come to terms with this reality. The type of borrower that is going to default is far more prevalent than the powers that be think. Mortgages were viewed as a tool to get in on the home price gravy train. Now that the ride is over, there may simply be no incentive for paying a mortgage when there is no upside for the borrower.

As with all speculative booms, the promise of higher prices is what drives the mania. When the promise is no longer real, there is an abrupt end to the boom. Congress can pass whatever bills they want to try and save "homeowners" but the underlying issue of what motivated the buyer in the first place cannot be fixed.

Have a good night.