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I realize the meme these days is "irresponsibility" - i.e., people who entered into unaffordable loans made their own bed and now they should have to lie in it.
That, however, is very much unfair. I personally feel more of the blame lies on predatory lenders, and in turn, deregulated lending practices.
No, I'm not defending myself - I have a 30-yr fixed at my own insistence because I'm 50 years old and know better. I remember the days of 13% interest. Most first home buyers probably do not.
Here's what happens: Renter dreams of owning home. Renter calls a popular mortgage lender and asks what it would take to get a loan. Mortgage lender gives a bucketload of options, all the way from fixed to ARM to interest-only. Renter is assured that every option is valid in certain circumstances, that property values will "always increase" and that you can "always refinance later."
So renter sets a goal and claws his way into a house with a mortgage. And mortgage insurance. And property taxes. And homeowner's assoc. fees. And credit card debt to buy furniture for the house. And more gas because of the long commute he now has to make. Yes, yes, he should have thought about all of that, but he wouldn't have incurred it in the first place if he'd not been lulled into believing that ARM was a good idea.
And so now, he's in debt to his eyeballs, the credit card companies have trashed his credit so that he couldn't get refinanced if he could, his house is upside down, his neighbors have already walked and his property value is declining by the day.
But we choose to bail out Bear Stearns, Freddie and Fannie, AIG et al and watch their CEOs walk off with millions. Yeah, THAT'S responsiblity.
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