Home defaults are different in Thailand. First off, you can’t just walk away. Even after a foreclosure, you are still liable for any additional losses.
But most important, says a Thai businessman to a visiting American, walking away from a house is considered ethically irresponsible.
He explains that what’s really wrong with the US is that we have no honor. Actually, that’s not how he puts it. He says in Thailand the financial and legal consequences of defaulting would be secondary. A defaulting borrower would suffer a serious loss of face and incur negative religious points, or karma. Some real estate investors are still “making merit”–performing redemptive religious acts–for losses following the 1997 crash.
I’m trying to visualize former executives of Enron or CEOs of investment banks in the US who walked away with millions of dollars, leaving a collapsing company behind them, publicly trying to make amends for their errors but clearly such bizarre displays of ethical behavior would probably just be mocked instead.
I down the rest of my gin and try to reassure him. Not everyone with overleveraged real estate will default, I say.
“In the US we may not worry about losing face,” I say. “But we do worry about losing our FICO scores.”