Sub Prime Stupidity
March 29th, 2007 - 3 CommentsTons of money chasing mortgage backed securities.
Interest rates really low.
Government says it wants everyone to be able to own their own home.
Interest rates slowly move up, but still at historically low rates.
Real estate markets begin to cool as rates rise from their uber-low levels, fears of inflation, real estate bubbles and poor job markets increase.
Loan defaults jump as some borrowers are unable to refinance their home because of the lack of ability to qualify (due to the fact that the double digit price increases have ceased to help them “qualify”) or simply because they had no business buying a home
Congress holds hearings and has esteemed financial experts like Jessie Jackson and other financial gurus from the NAACP testify on how it is the banks’ and brokers’ faults that people are losing their homes.
Some in and out of Congress call for regulation of “sub-prime” lending and prosecution of unscrupulous brokers and lenders because borrowers are defaulting on their loans.
Hmmm. Let’s see.
I buy a car and put a loan on it and decide I can’t make the payments. Let’s have a law that says the finance guy at the dealer and someone at the bank should go to jail because I didn’t/couldn’t make the payments. Cool. Maybe they should give me my money back too.
I get a credit card and buy a new plasma screen television, amp, tuner, DVD player, xBox 360, phone, lamps, coffee table and a chia pet. I can’t make the payments because I over extended myself. It should be the bank that gave me the credit card who gets in trouble for giving it to me. I don’t have any business getting a loan and even though we live in a free country, they should be put in jail and fined…or shot.
I buy a house and put a loan on it and decide that I can’t make the payments. If I don’t or can’t make my payments, it is not my fault that I didn’t do my homework and figure out if I could afford $xxxx a month today and $xxxx a month in 2 years time. It is the BROKER’S fault and the BANK’S fault. Not mine. I am not responsible for any of it. THEY SHOULD PAY.
I am not exactly sure when it happened, but it became OK for everyone to pass the buck for everything. Send 130,000 troops into Iraq to rid them of WMD and don’t find any. No worries. We really went there to liberate the people of Iraq…don’t be unpatriotic and be unsupportive of the troops. Huh? Ok. Take a loan on a property and can’t pay it back? Not your fault. Run a stop sign at 20 miles an hour with a kid crossing the street and my wife and I entering the intersection after we came to a complete stop. It is OK, because you were on the phone and you had a nail in your tire (this is a true story, I met up with her and her husband at the gas station 15 minutes later).
What the hell is wrong with everyone? Doesn’t anyone want to actually be responsible for anything anymore? Unreal. I am no saint and I am certainly not the most responsible person. But, I can at least say that I don’t have a problem admitting when I am wrong when I am called on something. If you decide to buy a home or anything of value and you ask someone to lend you more money than you have in the bank, you need to take your head out of your ass and figure out if what you are agreeing to is something that you can actually do…because that is what you are saying by signing on the dotted line. Get with it.
[tags]Sub Prime, Mortgage, Brokers, Banks, Lenders, Congress, Stupidity[/tags]
Fiscal responsibility does begin at home. Problem is, the markets and mortgage companies have introduced so many complications and mutant varieties of loans that a mortgage is not simply a loan – It’s also a way to finance your spending. And unscrupulous lenders have taken full advantage of this by shoving loans down the throats of unknowing buyers. A small percentage of the total subprime market, but still a fact that a lot of people didn’t know what they were getting into…
That’s the problem with everybody these days. Nobody wants to take responsibility for anything. Homeowners are now defaulting on their mortgages and we expect the government to bail them out.
I think the most important step is to be realistic in what you can and cannot do. I’ve seen so many first time home buyers jump into something they cannot afford only because they have big dreams.