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What is really going on?
What is in the heads and hearts of the lenders / servicers / investors?


  • If you are a Homeowner and a tax paying American citizian experiencing the pain of economic retraction?
  • Are you wondering why the emphasis is on Wall Street and not on Main Street?
We want to share our observations and understanding of the current economic environment and the stone-walling in helping Americans:

Our understanding after consulting with our long-term banking clients www.theopenorganization.com is that the lenders / servicers/ investors are hampered by the current accounting rules that are in place to deal with Homeowners in hardship. 

First of all, it is important to understand the lenders / servicers / investors are looking to maximize their own self-interests.

Your pain is not their pain if you are in the process of first exhausting all possible resources and avenues of "self-correcting"

A provocative paper by Brent White, a law professor at the University of Arizona, makes the case that borrowers are actually suffering from a “norm asymmetry.” In other words, they think they are obligated to repay their loans even if it is not in their financial interest to do so, while their lenders are free to do whatever maximizes profits. It’s as if borrowers are playing in a poker game in which they are the only ones who think bluffing is unethical.

Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis

Brent T. White - University of Arizona - James E. Rogers College of Law
December 7, 2009

Despite reports that homeowners are increasingly “walking away” from their mortgages, most homeowners continue to make their payments even when they are significantly underwater. This article suggests that most homeowners choose not to strategically default as a result of two emotional forces: 1) the desire to avoid the shame and guilt of foreclosure; and 2) exaggerated anxiety over foreclosure’s perceived consequences. Moreover, these emotional constraints are actively cultivated by the government and other social control agents in order to encourage homeowners to follow social and moral norms related to the honoring of financial obligations - and to ignore market and legal norms under which strategic default might be both viable and the wisest financial decision. Norms governing homeowner behavior stand in sharp contrast to norms governing lenders, who seek to maximize profits or minimize losses irrespective of concerns of morality or social responsibility. This norm asymmetry leads to distributional inequalities in which individual homeowners shoulder a disproportionate burden from the housing collapse.