You can't have your house and sell it too

One of the big things that really bothers me about the commentary on the mortgage mess is how situational the commentary is. On the one hand, you have articles like this one: Why Felix Should Walk Away which claim that people aren't attached to their houses and will walk away once their equity goes negative. The article focuses on making the case the home owners have no ethical duty to stay:

The reaction of the CNBC hosts makes it seem as though Felix had asked whether he should sell his grandmother into slavery. "If you agreed and you signed that contract, you have to stick to it," admonishes Carmen Wong Ulrich. "It's all about that commitment that you made to the house."

To the house? How can anybody make a commitment to a house? I can see that Felix signed a contract with a lender, but remember that the lender was writing negative-amortization interest-only mortgages and then turning around and selling them off to an investment bank to securitize, pocketing an up-front profit. Such lenders kept on making this trade until there was no more appetite for such loans any more, at which point they closed their doors, keeping all their old profits and leaving the losses with the investment banks and the banks' clients.

So I don't think that Felix has any kind of moral obligation to the lender, nor to the sophisticated financial institutions which ended up buying the lenders' mortgages and who should have known exactly what they were doing.

Implicit in all of this is the idea that the owner's emotional connection to the house is of little importance - which it in fact is in the face of far more weighty forces.

The flip side of the coin comes up with all of the "save the home owners" rhetoric that is bandied about. A lot of it is couched in language that is focused on trying to float housing prices back up to late 2007 levels, but implicit in most of it is the idea that it would be utterly terrible for home owners to "lose" their houses... and be forced to live in apartments like lots of other, seemingly happy people.