This blog has nearly always been blessed with awesome commenters. Some of my favorite commenters are Kitty, Stacey, Foobarista, Sam (there are a couple of “Sam” commenters. The “Sam” I am referring to has been reading this blog for years), Miguel, and many others. Although I write this blog as a way to share my thoughts with others, I really like reading the thoughts and opinions (even if they don’t agree with me) of others as it makes this blog much more entertaining.
One comment that was left this morning by someone named Rabbit, caught my attention. It follows:
I get tired of all of the blame being heaped on the regular folks who bought these houses that they are now having trouble affordingâ€“and that we should leave them to suffer economic ruin of their sole creation. I believe in personal responsibility, but there is plenty of blame and responsibility to go around here, not just the homeowners.
When someone applies for a mortgage, they are not alone. There are two partiesâ€“on one side is a regular person (a school teacher, fire fighter or chef), and on the other side is a finance â€œprofessionalâ€ whose job is to decide the terms of a personâ€™s mortgages. These â€œprofessionalsâ€ made loans with little regard to actual prospects for long-term payment on the theory that since house prices were rising, the borrower could always sell or refinance.
That wasnâ€™t the person buying the houseâ€™s decision; it was the judgment of people who were professional mortgage-offerers. The â€œprofessionalsâ€ got lazy at this point, because they were easily and quickly selling off these mortgages as securities. There were no consequences to them if the borrower could not pay.
There really is plenty of blame to go around here (greedy house fippers, negligent banks, the bond dealers, lazy regulators, the Fed, etc.), but I think the smallest amount of blame here would be some school teacher or business owner who decided to basically trust that the financial services professionals and government regulators knew what theyâ€™re doing.
I think it Obamaâ€™s housing plan is a good idea for a bad situation and will really help middle class Americans.
Fair enough…there is plenty of blame to go around and we have done that on this very blog. I have blamed mortgage brokers, banks, brokerage firms, and anyone else I can think of. True, no party acted alone.
My problem with this comment is the last part of the last sentence, which reads:
…but I think the smallest amount of blame here would be some school teacher or business owner who decided to basically trust that the financial services professionals and government regulators knew what theyâ€™re doing.
Sorry, but that’s just not right. The BULK of the blame has to be placed on those who signed that mortgage agreement. Buying a house is a very important decision and people should not have trusted anyone but themselves in making that decision. People should have known that the broker, real estate agent, banker, and everyone else DID NOT have their best interest at heart and it’s very naive to think so.
Just because that handsome mortgage broker tells me that I can afford something doesn’t mean I can actually afford it and I’m an idiot if I believe him. It’s sad but true.
I think we could go along way in preventing future problems of this sort by requiring first-time homebuyers (or maybe EVERYONE) read or watch a video on the homebuying experience. A video that walked through all the steps of buying a home and choosing a mortgage and how to budget for a home would go a long way in helping people understand what it is they are about to do. Sure, some people would ignore the help but many others would embrace the information.