Lenders often use a “moral argument” to try and persuade borrowers who fall behind on payments in an effort to convince them to continue making payments. As a debt collector, this is understandable, because any methods may be used as long as they are not illegal.

As yet, guilt trips are lawful. (And for some, mother-in-lawful.)

But real estate law expert Nick Love, disagrees. He says that foreclose is a legitimate option in the trust deed which may be in everyone’s best interest for some borrowers to exercise.

“It is vital to California’s economic recovery that underwater homeowners walk away from excess debt. Lenders who insist on homeowners fulfilling an artificial moral obligation to their contractual promise have no interest in allowing homeowners to contribute to the future economic recovery of our state. Lenders (and congress who crippled the saving grace of bankruptcy in 2005) want homeowners to lock every cent of their income into supporting depressed assets.

“Homeowners who walk away from underwater homes free up their income and are able to spend more freely on consumer goods. Disposable income spent on consumer goods boosts both the job market and the economic health of our sales tax dependent state.”

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