According to a newly released report by the Chicago Booth/Kellogg School, 26 percent of Americans have faith in the American financial system. However, the mortgage system in particular is not faring so well[1]. According to the report, while faith in the financial system as a whole is up, homeowners retain a “lingering discontent” with mortgage lenders. This discontent extends to the point that almost half of the people who claim to be “morally opposed to strategic default” might not have a problem with it as long as the lender on the other end has been accused of predatory lending.

While the overall tenor of the report is positive – about a fifth of Americans want to increase their investments in the stock market and 6 percent more Americans than last quarter have positive feelings about the financial industry in general – the results could indicate upcoming complications for the mortgage industry. However, homeowners actually evinced a clear desire to “get back” at banks and lenders for being dishonest via strategic default, and a continuing lack of confidence in the jobs market is hindering serious optimism for housing[2]. In “hardest hit” states like Arizona, some promoters are taking advantage of these sentiments, going so far as to create educational seminars on the pro’s and con’s of the decision to default. One controversial law professor argues that the question is not a moral one at all, but rather a practical business decision that should be made objectively and without the moral compass[3].

Do you think that this take on strategic default is appropriate? Should Americans have more trust in their lenders?

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[1] http://www.dsnews.com/articles/faith-in-financial-industry-rising-job-security-remains-low-2011-01-24

[2] http://www.prnewswire.com/news-releases/trust-in-financial-system-climbs-to-26-percent-on-second-anniversary-of-financial-trust-index-114478914.html

[3] http://www.azcentral.com/business/realestate/articles/2011/01/20/20110120arizona-brent-white-webinar-mortgage-default.html