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As I Was Saying: Who's to blame?
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There is a mortgage "crisis." There isn’t. Mortgage failures are "spreading far and wide"? They aren’t. "No money down, adjustable, sub-prime" lending is to blame? Yes, some say. No, others state. Foreclosures are up? No, only in some categories. Lenders are to blame! Consumers should have known better!
I am writing surrounded by the media frenzy of "news" about the mortgage market, lenders, rates, foreclosures and projections, predictions, ad nauseam. In all of this babble, the most moving reports are the personal stories of individual families "trapped in debt." Other than my empathy for them, I am unaffected. My mortgage, now a decade old, fixed, that purchased a $100,000 condo here, appreciated to sales of $300,000 a few years ago (I gasped!). As the bubble rose to $350,000 asking (at its peak), owners put hand-lettered signs in their windows and sold their units the next day! (More gasps!) We all recall our wonder at the market. It was the number one topic of neighborhood gossip. House flipping entered our vocabularies! Today, we all now better understand what the terms "hot/cold" and "up/down" mean in real estate.
The whole puzzling mortgage market subject has got me thinking about my own experiences there over 45 years and several homes. I struggled to save (as a career teacher) with a family. No down payment. No low or attractive adjustable rates. Not then. For me, the reality of planning for that first "dream house" of our own meant saving for a down payment (then 20 percent!) and then qualifying for a bank loan and serious, cautious discussion about whether we could meet the monthly payment obligation in years ahead. Finally, with a few butterflies, but honest reflection and determination — we made it, after eight years of rented apartments.
For many years, modest home appreciation and the building up of equity permitted, "moving up" (after 5 to 7 years in each house) to one larger — another bedroom, a bigger kitchen, perhaps even a den. This was a familiar pattern to our middle-class family and friends. And what fun it was! The new house-warming parties! Tackling the inevitable home improvement projects, the decorating, etc. Each mortgage was carefully drawn. Guidelines for income, steady employment, credit rating, etc. were understood and followed. Risks? Oh, yes. What could we afford? What if this happened? Or that? Or that? We risked only what we reasonably could.
Among those trapped in debt and facing foreclosure today, it seems to me that the pattern I accepted for my mortgage contracts in no way resembled theirs. One family story of woe includes details that the refinancing of their $207,000, 30-year fixed to an adjustable, sub-prime was entered so they "...could pay down hefty obligations on their late-model SUV and a luxury equipped pick-up." Expecting to "clear up already unmanageable debts," they reported that their mortgage broker "...informed them just before closing that their remaining debt would be $3,500 more than they had expected." This openly "risky" information was ignored. They signed and were soon unable to make the new payments.
Blame in this current media frenzy of a "mortgage crisis" is accurately widespread. "Greed" is the operative word whether applied to speculators, lenders, or consumers. Remember all the well-meaning, but unrealistic calls for expanding home ownership to those less able to qualify by income or ability to overcome risks? Bad credit? No problem! Down payment? Not necessary! Monthly payment too high? Hey, let’s discuss lowering that with an adjustable! Risks? What risks? Sign here.
My first mortgage (in 1965) was for a $23,000 two-bedroom, small bungalow outside Chicago. Put down 10 percent (had saved $2,300 dollars!) at a then 11 percent rate. Monthly payment was $110! And we talked over and over again about the risks, the what-ifs, our income security — before signing that paper. Sounds like it was easy, doesn’t it? Ask others with some grey on their heads just how easy it was to move into your first house then. I think you would hear some say that "trapped in foreclosure" at that time would have meant embarrassment and self-incrimination. It wasn’t easy, but, we knew the risks, accepted the guidelines for meeting our responsibilities, and accepted that poor financial decisions focused blame on ourselves — no one else.
Who is to blame today? The line is long, isn’t it?
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What an insensitive ahole!! Thousands of homes are being foreclosed on in SW Florida because of the greed of mortgage brokers and bankers.
Bush and his idiotic economic advisors are to blame for allowing these ripoff mortgage brokers and bankers to prey on unsuspecting home buyers. These brokers were telling all kind of tales to sign up people who never read the fine print until it was too late.
Now, the administration will bail out the rich banks but will do nothing to help the person being foreclosed.
Back in the 60's it was easy for a young person to afford to buy a home, real easy compared with today. Kids today have no choice but to rent unless they were suckered in by these snakes in the grass.
#1 Posted by JohhnyB on September 12, 2007 at 11:59 p.m. (Suggest removal)
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