Quote:
Originally Posted by Dottore
I have some sympathy for this view. In contract law there is generally a concept of "force majeure" that excuses a party from walking away from a contractual commitment in certain limited circumstances.
"Force majeure" is generally considered to be an unforeseen factor that so completely changes the bargain that was made in the contract, that it would be inequitable to hold parties to their contractual terms.
In my mind the catastrophic drop in housing values is very close to being a "force majeure" event. At least I think there are cases where a compelling argument for this can be made.
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That, I'd have to disagree with.
The value of the house has nothing to do with the obligation to ability to pay the loan.
The borrower still owns the house. It may have gone down in paper value to half, but it's still the same house, still serves the same function to the homeowner.
I don't see anything close to a force majeure argument, to legally relieve a homeowner based solely on a big drop in housing values.
The paper value of the underlying collateral is of no relevance to the borrower's obligation.