Essay on Ethical Dilemma-Strategic Default - 2281 Words

Introduction In 2010 more than 1.05 million homes were foreclosed on in the United States, up from 918,000 in 2009. It is estimated that 26 percent of these homes were strategically defaulted on by homeowners that were â€Å"upside down† in their home equity. Is the decision to strategically default ethically sound? It has been estimated that in 2009 foreclosures cost communities $502 billion and homes that in close proximity to foreclosed homes lose, on average, $7,200 in home value (Center for Reasonable Lending, 2009). Clarify Concepts Strategic default is the non-payment of a mortgage obligation by a homeowner that is â€Å"underwater† in their mortgage contract and has other meaningful credit obligations on which they continue paying†¦show more content†¦The rationale behind this provision in the Bankruptcy Code is to promote mortgage lending by protecting lender losses in bankruptcy (Levitin, 2009). If the Bankruptcy Code provided the option of modification of mortgage obligations it would lessen the losses suffered by lenders due to foreclosure, extends the mortgage burden between the homeowner and lender, and avoids the cost of possible government bailout. The increasing occurrence of strategic default should encourage lenders to alter their foreclosure strategies and pursue defaulters for monies for any remaining liability after the property is sold. Unlike homeowners that involuntarily default on their mortgage, for reasons such as unemployment, major health issues or the death of a primary wage earner, homeowners that chose to strategic default are more likely to have a reliable income stream and possess other assets. If the lender pursues and obtains a judgment against the strategic defaulter, it remains a lien on the debtor’s non-exempt assets for up to twenty years, this includes wage garnishment (Gomez, 2010). In Monmouth County, New Jersey, for example, the average mortgage default was betweenShow MoreRelatedThe Ethical Issue Of Anthem Essay1702 Words   |  7 PagesThe ethical issue Anthem faced is that employees felt they were betrayed and that Anthem violated their relationship which was built upon promises. This h appened as result of a company decision and its communication thereafter. Description of Anthem Anthem Inc, a leading health insurance company that provides health insurance for personal, business and government entities across the States. 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