Generally, I would consider refusing to pay one's debts to be unethical (distinguishing here between "refusal" and "inability").

Is there an exception for a mortgage? Is a "voluntary foreclosure" morally and ethically acceptable? Some have argued that since relinquishment is an agreed upon penalty, a voluntary foreclosure does not carry any ethical problems.

On the other hand, incarceration is also an "agreed upon penalty", but I would not think that robbing a bank is ethical.


In the interest of clarity (hopefully), the question can be restated as: Can a mortgage be thought of in terms of a simple agreement between two parties where all of the outcomes are ethically equivalent? That is, is the bank really stating: "We'll do 'A' (loan you money) if you agree to 'B' (pay it back with interest) or 'C' (give us the house)". The "or 'C' " part is the focus of my question. Is it truly equivalent to 'B"?

  • Could you elaborate on why you'd think mortgage could be an exception? Also note that the "agreed upon penalty" is a can of worms. I never agreed to pay taxes or to certain laws; I simply found myself in an environment in which these laws were in force, and I had to obey or else. – R. Barzell Oct 15 '15 at 15:26
  • A mortgage could be an exception because generally ,houses hold their value. Indeed, mortgage companies rely on this, making it more likely that either part of the agreement: "Pay back X dollars or give use the house" is an acceptable alternative. – Michael J. Oct 15 '15 at 18:54
  • One thing that complicates the fit of the question for philosophy.SE is that there's a legal question tied up in here. Whether B and C are equivalent or substitutable is partially a question of legal jurisdiction (in the US, the answer varies by state). Are you just asking if generically, there's something wrong with having this sort of carve out? If so, can you spell out why you might think so? – virmaior Oct 16 '15 at 0:22

You don't think robbing a bank is ethical? What you think bankers do?

Yours is probably posed as a narrower question of legal ethics. But from a broader perspective it may be considered as a philosophical question of the ethics of civil disobediance. How to act if you are caught between two incommensurable ethical commands, usually between "state" and some "higher" authority.

According to Hegel, this is the very crux of dramatic tragedy and a dialectical engine of history. He cites the case of Antigone, who is literally destroyed by the historical shift from ancient family duty to the laws of the state.Thoreau's or Mandela's "civil disobedience" are other example, though our modern fates are usually somewhat softer than Antigone's.

So, when could one ethically defy a law or violate a legal contract? When one can and must act rationally in the expectation of a "more just" future, however determined.

I would argue that the entire financialization and credit-debt structure of the U.S. is overtly unethical, concentrating wealth based ultimately on bonded taxation in the hands of small rentier class. It is "unethical" not only in being inequitable and unsustainable, but in the Hegelian sense of forcing the mass violation of other, incommensurable social duties.

The prime example is student debt. Capital value demands ever-increasing levels of education, which becomes an implicit duty of the young citizen. Yet the costs are transferred to other countries (hiring educated workers abroad) or into mass indebtedness of an entire generation. An indebtedness that increasingly outpaces the capacity of future earnings to liquidate it. Hence ethically and socially "irrational."

By this standard, I actually believe students today may have a "higher obligation" to not repay debt, one that outweighs the personal or even immediate social consequences. The case of housing may not be so immediately apparent, but there is a good historical argument that mortgages should be valued against average earnings in some way, not according to shareholder value or remote derivative transactions that affect the debt levels yet are entirely unaccountable to the social necessity of housing.

Bit of a stretch from home mortgages to Antigone, but hope this helps you consider the issue afresh.

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  • You are correct in that this was was posed as a narrower question of legal ethics. I've updated the original for clarity – Michael J. Oct 15 '15 at 19:12

Given the concrete situation this is a question on applied ethics which as the IEP point out requires

considerable empirical knowledge, and historically pursued by looking at different kinds of human practise

Still, certain observations can be plausibly made.

Generally, I would consider refusing to pay one's debts to be unethical

Agreed, when one abstracts away away all concrete circumstances.

But of course concrete situations matter, as you point out:

(distinguishing here between "refusal" and "inability")

Is there an exception for a mortgage?

What's exceptional about mortgages is the size of obligation compared to our other obligations we meet in our day-to-day lived circumstances. It's not comparable say with forgoing a fine to be paid at library, say, or for a parking violation.

Is a "voluntary foreclosure" morally and ethically acceptable?

Individually this is difficult to determine, but in the large ie taking the wider view, a wave of disclosures reveals a systemic failure; and as these are acts of men rather than of a god, then an ethical failure.

Some have argued that since relinquishment is an agreed upon penalty, a voluntary foreclosure does not carry any ethical problems.

Put as simply as lthis - then no; one, indeed can argue the opposite that a contract without such a clause, an option to foreclose, would be unethical given the size of the obligation, and it's length.

The ethical considerations lie at a systematic level - the larger economy and civil society; when one considers that mortgages are the main means of allocating living space then the ethics at that level need to be considered.

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