There’s been plenty of blame placed on home lenders, and that’s led to a call for more regulation by many politicos.
But what about the borrowers who agreed to the loans’ terms and the cost of any regulatory action enacted to protect these borrowers?
Barbara Kiviat disregarded those key points in her article “Ground Zero of the Real Estate Bust,” published in the August 27 issue of Time. She suggested there was a predatory element involved meant to lure the unsuspecting “addictive” borrower to get in over his head.
“Still, the EZ Credit addiction is tough to cure,” wrote Kiviat. “Drive through Green Valley Ranch, and you still see signs for 0 DOWN PAYMENT, 100% FINANCING.”
She touted the laws enacted in Colorado meant to “protect the borrower,” but ignored any heightened cost associated with such legislation.
It’s not likely the lender is going to catch any breaks on the regulatory side or in the court of public opinion, said one expert.
“Just think about it – if it is a giant mortgage banker versus a family being put out of their home – no matter what the fact pattern may be after that, who wants to take those odds?” said Jerry Bowyer, author of “The Bush Boom,” to the Business & Media Institute. But, the bandwagon for more regulation is loading up.
In Monday’s Financial Times, Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, wrote an op-ed advocating more regulation.
“In the debate between those who believe in essentially unregulated markets and others who hold that reasonable regulation diminishes market excesses without inhibiting their basic function, the subprime situation unfortunately provides ammunition for the latter view,” wrote Frank.
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Where does it end? If I
August 21, 2007 - 15:47 ET by Darth DutchWhere does it end? If I make a stupid purchase, then I make a stupid purchase. As long as the wording of the terms of the loan are there and the person signs off on it, it's ultimately their fault. If the loan company engaged in deceptive practices, then maybe there is an argument, but by and large people bit off much more than they could chew and are now paying for it (literally).
And who in their right mind wouldn't think that a small (or no) down payment with most of the loan being financed isn't going to result in high payments, especially on an adjustable mortgage? We're not talking rocket science here.
Dutch
I learned many years ago,
August 21, 2007 - 15:52 ET by bassndudeI learned many years ago, when you see the words, "Adjustable Rate" in any type of loan agreement, you always ask, "What? Are you nuts?" And then, in the words of the sharks in Nemo, "Run away! Run away!"
Save a SeAL, club a liberal!!
I'm sick and tired of all
August 21, 2007 - 15:54 ET by Mean Gene Dr. LoveI'm sick and tired of all the blame on the lenders. Nobody is forced to borrow money. Nobody is forced to purchase a house/car/boat that is beyond their means. Nobody is forced to go to a high-tuition university.
These are all personal choices made by individuals. Where's the personal responsibility/accountability?
"Whoa, whoa, whoa, whoa, whoa! There's still plenty of meat on that bone. Now you take this home, throw it in a pot, add some broth, a potato, baby you've got a stew goin'!" -- Carl Weathers
I could not Second anything
August 21, 2007 - 15:59 ET by bigtimerI could not Second anything more Dr. Love....
This is getting way past old...I have never seen anything like this ....
You sign, your are responsible....simple as that.
No one else's fault but the person who signed.
Period.
And, on the flip side...
August 21, 2007 - 20:36 ET by heldmyw...show me a lender who, no matter how predatory, dishonest or evil will deliberately make a loan that is not going to pay off, will result in litigation, foreclosure, and all of the attendant lawyer-laden ills.
Sure, they take gambles and try to hedge subprime loans with higher interest rates to cover losses, but does anyone really believe that they want losses?
"capitalism" is NOT to blame.
August 21, 2007 - 16:07 ET by sarcasmoSo I liked this guy's article from today, and yesterday's explained the yen carry trade in a relatively-simple way. Since that kind of "risk free" deal is part of the global problem, more people should probably try to understand it. When I say "the Yen carry trade" to most people, I usually get a puzzled look...
JMR
Rally online with fans of Dr. Ron Paul.
its not just the house payment...
August 21, 2007 - 16:08 ET by mawendt... its everything else.
the easy car financing, the easy credit allowances, the everything fill-up-your house-cause-its-cool easy payment terms. follwed up by the easy do-it-yourself bankruptcy. you can have your cake, etc, etc.
i think it is apparent, if most people had only a house payment and living expenses, they probably wouldn't get wiped out financially when something negative happens. they'd struggle and overcome it, rather than crash and burn. it IS the borrowers, not just getting involved in a $2500 thirty-five year house mortgage, but also that 7 year $350 car payment with accompanying $200 a month insurance, the $5000 added to the $6000 credit card debt for that trip added to those christmas presents they're still paying off... death by 1000 debt pricks. one kick and the whole thing collapses.
so save money and avoid debt should be the push by the media. and don't bail out the lenders, it's a feeding frenzy that occurred in the 80's and now again 25 years later. if there is a bailout, it'll happen again... 25 years from now.
oh, wait. i forgot. there is no personal responsibility anymore. by lender or borrower. maw
“In the debate between
August 21, 2007 - 18:56 ET by third eye“In the debate between those who believe in
essentially unregulated markets and others who hold that reasonable
regulation diminishes market excesses without inhibiting their basic
function, the subprime situation unfortunately provides ammunition for
the latter view,” wrote Frank.
I guess that depends on your definition of reasonable.