People have a moral obligation to repay any loan that they borrow. The loan documents that a borrower signs have a clause that says, “I promise to pay” the borrowed amount. Promises made at the time of loan disbursement should be fulfilled. George Brenkert emphasizes that a promise is a promise, which binds any adult to fulfilling the terms of a contract (Shaw & Barry, 2017). Derek Figg paid $340000 for a home, which two years later, depreciated in value to about $230000. He had not cleared $318000 on his mortgage debt. Figg decided to default his loan and leave his home. Koellmann faced the same circumstances, after his apartment’s value dropped from $215000 to $90000. He chose to continue paying his mortgage. Both individuals face a similar predicament. They could choose to continue making the payments because they have good jobs, but are also aware that doing so places them at a great disadvantage.
George Brenkert’s argument applies by virtue of maintaining the ethical relationship that exists between lender and a borrower. Both Figg and Koellmann were fully aware of the agreement they signed. They did not indicate any signs that the property sellers had intended to deceive them in the deal. Both individuals are obligated to fulfill the loan requirements by paying the full amount. Defaulting a loan on self-interest cannot be ruled out since non-conformity to law is legal in some cases (Shaw & Barry, 2017). People who default loans are unable to pay or find no sense in making payments that are unfair from their perspective. Individuals facing the dilemma of adhering to their ethical duty to repay the loan or fulfill their moral duty to provide for their family or act on self-interest can choose the latter based on strategic default. Strategic defaulters are liable for the losses incurred by banks and the economy but their decisions are moral because people always opt for choices that are morally right for personal wellbeing.
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References
Shaw, W. H., & Barry, V. (2017). Business ethics (9th ed.). Boston: Cengage Learning.
