Two "Persons" Act the Same, But Only One is Unethical?

For many months now, I've been reading articles about "underwater" homeowners who are choosing to walk away from their mortgages.

We're not talking here about genuine foreclosures -- people who have lost jobs or assets and can no longer afford to pay their mortgages -- but the so-called "jingle mail" types, the ones who do the math, figure that it's just not worth it, and mail the keys in to the bank, setting off a foreclosure.

There are general articles about the phenomenon (such as Roger Lowenstein's piece in early January in the New York Times); there are instructional articles (like "How to Walk Away from Your Mortgage" online at BusinessInsider.com); there are even cheerful websites (like YouWalkAway.com).

The tone ranges from the strongly censorious to the happily matter-of-fact.

Lowenstein, in the Times, quotes John Courson, president of the Mortgage Bankers Association, as saying that those thinking about walking away should also think about, "What about the message they will send to their family and their kids and their friends?"

Lowenstein also quotes -- widely reported elsewhere also -- Former Treasury Secretary Henry Paulson Jr. as saying "any homeowner who can afford his mortgage payment but chooses to walk away from an underwater property is simply a speculator -- and one who is not honoring his obligation."

In contrast, in an article in today's Times, David Streitfeld quotes a mortgage broker in Scottsdale, who says, "Since the beginning of December, I've advised 60 people to walk away....Everyone has lost hope. They don't qualify for modifications, and being on the hamster wheel of paying for a property that is not worth it gets so old."

"Walking away" will ruin your credit score; should it ruin your character as well?

I don't want to encourage people not to honor their obligations. But what's so special about home mortgages? Or rather, what's so special about a mortgage held by a single individual or couple, compared to one that's held by a corporation (a "person", of sorts, under law)?

When Tishman Speyer and BlackRock Realty walked away from their $5.4 billion Stuyvesant Town deal in New York a week ago (see Times piece by Charles Bagli and Christine Haughney, here), there were complaints, but no accusations of immorality. I'm sure that "walking away" made sense to the principals. After all, as my cost-accounting professor told us years ago in class, the only lesson that he really wanted to pound into our skulls was that "sunk costs are ... sunk."

Other investors in the Stuyvesant Town / Peter Cooper Village included pensions funds, countries, and banks. Why aren't they heaping scorn on the Tishman Speyer principals for their weak morals?

And if Mr. Paulson is right, and those homeowners who walk away are "simply speculators", well, what were the banks who approved those mortgages, chopped them up, and immediately resold them?