The Ethics of a Strategic Foreclosure

Some ethicists question the morality of strategic default leading to strategic forclosure, arguing that the borrower has a duty to make payments on debt if s/he is able to do so. Other ethicists argue that there is no such moral duty; they say that a mortgage is a non-recourse loan of known risk to the lender.

Some argue that there is a moral duty for strategic foreclosure in order to provide for the health and welfare of the family, and that one should decide “unclouded by unnecessary guilt or shame”, that it is a business decision.

The balance is between the obligation to honor a contract versus the obligation to care for one’s family.

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