"We should have went to the mob for a loan," said Bronx homeowner Ana Rosado on CNN's March 27 "American Morning."
Her statement, extreme as it was, rivaled network reporting in March about subprime loans and foreclosures.
Reporters called the situation a “meltdown,” an “epidemic” and a “crisis” that could potentially lead to recession, and blamed lenders while almost entirely ignoring personal responsibility for borrowers. Instead, media accounts portrayed borrowers as victims, many of whom seemed shocked when their adjustable-rate mortgages adjusted upward.
While lenders were painted as the bad guys, they were rarely allowed to give any perspective. The networks, ABC, CBS and NBC, have done at least 26 stories on subprime loans just in the month of March, but only six of those included a lender’s voice. That meant an overwhelming 77 percent of stories didn’t even try to explain the lenders’ position.
Reporters overlooked facts, made excuses for borrowers and made all lenders sound like predators and then speculated about the damage the subprime situation would have on the overall economy.
Some of the worst examples:
ABC's "World News with Charles Gibson" used the pejorative term "Home Wreckers" for lenders on March 26 and 27.
NBC's "Today" called people facing foreclosure "victims" on March 25.
ABC's "Nightline" blamed American's debt issues on "lenders egg[ing]them on" in a March 14 story.
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You're right about the covera
March 28, 2007 - 17:15 ET by GalvanicYou're right about the coverage, Julia. It's been pathetic. The worst is when they label these folks as victims.
On one broadcast, they featured an woman -- described as an 'immigrant' --- with a mortgage that now costs $3600/month, while she only makes $2400/month. The story never addressed the fact that this woman should've never taken out a variable-rate mortgage with such low income (I can't imagine her making the payments at the original rate.) She obviously couldn't afford the high risk from the get-go. How did she even qualify for the mortgage? Has she seen a reduction in income since she took out the mortgage? The story never says.
So, is she a victim? Perhaps a victim of her own greed, or lack of common sense, or ignorance --- take your pick.
I'm sick of hearing about the
March 28, 2007 - 17:21 ET by Mean Gene Dr. LoveI'm sick of hearing about these 'victims' of sub-prime lenders. If these people truly are 'victims' they have made themselves victims by making poor decisions or living beyond their means.
When one goes to buy a house, they use an agent (or make a conscious decision to not use an agent), they work with the loan officer, and they have the right to bring an attorney (at their own expense) into the proceedings if they so choose. I cannot honestly view anyone that has purchased a house or land as a "victim"...there are just too many people involved in the process and too many decisions the buyer makes (with an entitlement to full explanation prior to the decision) to become a victim of an "evil" sub-prime company or market.
In a story a day or two ago someone one was quoted as saying that the sub-prime lenders are predators and their prey are these 'victims' that can't (not won't...the story didn't make a distinction between can't and won't) pay their bills. The whole 'victim' implies predation notion is ridiculous...are natural disasters predators?...they have thousands of victims every year. Were "victims" of past stock market crashes the prey of the markets? One can be a "victim" without any "predation" whatsoever. These people that default on their mortgages are not victims of the sub-prime lenders. They may be victims of other forces or their own slothfulness or stupidity, but not the victim of their lenders.
How many of these 'victims' used credit extended to them to buy...
Now, how many of these same people...
I loathe the culture of victimization...it is just another ploy to shrug off personal responsibility and accountability.
I would bet willing to be that 99% of these people were financing their entire lives. This is nobody's fault but their own. I have personal experience with this. Thanks to my lovely bride, she was able to help me discipline myself to live within our means, the relief that came when we climbed ourselves out from under my debt was one of the most rewarding experiences of my life. All it takes is discipline to live within your means.
"There is a time to take counsel of your fears, and there is a time to never listen to any fear." --General George S. Patton, Jr.
Your second sentence says it
March 28, 2007 - 17:58 ET by Del DolemonteYour second sentence says it all-they have made themselves victims because of their poor decision-making. Having said that, though, the lenders HAVE had a hand in these peoples' bad decision making. They have done this by misleading the people they're lending to, many of whom are elderly, and others who are easily confused.
I took a real estate course in November of 2006 and the term "predatory lender" was used all day, with plenty of examples. I would have to look up my notes, but we were given plenty of examples of lenders who were, in fact, predatory.
A lot of this has to do with "new" legislation and regulations aimed at pressuring lenders to increase their presence in minority neighborhoods. Said "new" legislation and regulations were-surprise-a product of Dubyah's predecessor in office, which may have something to do with the current "reporting" on the situation.
I'm not saying you're entirel
March 28, 2007 - 18:16 ET by Mean Gene Dr. LoveI'm not saying you're entirely wrong about "predatory lenders" but, people that are in the market to buy real estate are entitled to (and should) use an agent and seek the advice of an attorney. Yes, it costs money to consult others, but it will help them to make better informed decisions. It still comes down to a personal decision. Nobody is forcing anyone to take out a loan on a home that is beyond one's means.
When I bought my house I was approved for way more than I could afford. I knew I would never be able to make those payments (and continue to feed my family) on the amount offered to me. I purposely chose to buy a house that was well within my means. The problem with too many people these days is that they think they need to have a nice house in the nice neighborhood regardless of cost...then they think they need all the other material possessions and luxuries to uphold the image of being well off. I cannot blame the lenders for their condition. I will say I don't agree with the lenders practices as I find their practices can be quite unethical, that's why we have the phrase "caveat emptor". It all comes down to personal accountability responsibility in my book...you'd be a fool to think that anyone other than yourself has your best interests at heart. Lenders exists to make money...and they know that a fool and his money are easily parted.
"There is a time to take counsel of your fears, and there is a time to never listen to any fear." --General George S. Patton, Jr.
Could it be the Networks are
March 28, 2007 - 17:51 ET by mattmCould it be the Networks are just jealous because their advertizing rates have fallen with their ratings - so they've had to adjust their ad prices down?
Believe it or not, the new is
March 28, 2007 - 18:06 ET by Del DolemonteBelieve it or not, the new issue of TIME Magazine has an article "in defense" of the sub-prime lending explosion, which concludes:
"So yes, things may have gotten out of hand. But neither should we clamor to return to a status quo where almost 60% of African Americans who want to buy a house are told they can't".
Why does the TIME story defend the whole sub-prime lending saga? Because it was a Bill Clinton spawned phenomenon.
They are defending it from a
March 28, 2007 - 18:20 ET by Mean Gene Dr. LoveThey are defending it from a "see...affirmative action is good!" point of view.
And like you said "it was a Bill Clinton spawned phenomenon."
"There is a time to take counsel of your fears, and there is a time to never listen to any fear." --General George S. Patton, Jr.
Two-way street
March 28, 2007 - 18:46 ET by niner-four-whiskeyI don't think Julia reads or cares about any of the comments here.
What about the investors, Julia?
What about the taxpayer, who will be picking up the bill on these defaults, Julia?
Let's face it Julia, this is a two way street. Sure, there are LOTS of irresponsible people who abuse credit in America.
On the other hand, the consumer lending industry is positively rife with deceptive business practices. Otherwise, there would be no fine print on the contract.
A long time ago, mortgage lending was a pretty rigid process. You had to meet certain standards of creditworthiness, income and down payment to get a mortgage. The bank made the loan, which in turn came from depositor funds. The bank had a vested interest in making loans to creditworthy customers so that the bank made a profit and protected the assets of depositors. Thus it wasn't in anyone's interest to make loans to people who couldn't pay them.
But it doesn't work like that anymore. Most mortgages are NOT placed by the lender, but by mortgage brokers who have no vested in the long-term performance of the loans they place. It is in the business of brokering mortgages where the pressure to loosen requirements and "de-regulate" came from. More loans means more commissions. Simple as that.
Today's mortgage broker gets a commission on each loan made as soon as the paper is signed and he's out of the picture with no further interest in either party. That sets up a scenario where the interests of consumers and investors (where the money comes from) are in conflict with the mortgage broker, who's only interest is getting his commission. There are have been widespread abuses by mortgage brokers who have filled loan applications with fraudulent information, lied to both consumer and lending instutitions.
So yes, at least some of the consumers ARE victims of fraudulent, criminal activity, as are the investor's who's money was lent and we taxpayers who will be picking up the bill for these defaults on loans that should never have been made in the first place.
Shame on you Julia, for your repeatedly one-sided portrayal. It's just as bad as the network coverage.
1) Journalists never get econ
March 28, 2007 - 18:51 ET by Edhenry1) Journalists never get economics or business principles correct. They just aren't bright enough to understand.
2) They do not believe in what makes America work, which is:
Individual freedom is directly proportional to individual responsibility.
What about honesty and integr
March 28, 2007 - 19:30 ET by niner-four-whiskeyWhat about honesty and integrity and fair play?
How much of a chance does an individual consumer stand against a very large corporation with thousands of employees and a team of lawyers who's only job is to tilt the game as far as possible?
It's almost like the Arab world, where a woman gets violently attacked and sexually assaulted, and the judge sentences her to death for being promiscuous.
"What about honesty an
March 28, 2007 - 20:30 ET by ckc1227"What about honesty and integrity and fair play?
How much of a chance does an individual consumer stand against a very large corporation with thousands of employees and a team of lawyers who's only job is to tilt the game as far as possible?"
Well, since most people who take out mortgages aren't taken advantage of, I'd have to say their chances are pretty good. Furthermore, one $20 book(or less) will tell you all you need to know to keep from getting screwed, no matter how much the evil corporation tries to "tilt the game". But we can't have consumers being proactive about their finances, can we? Personal responsibility is just so uncool.
"It's almost like the Arab world, where a woman gets violently attacked and sexually assaulted, and the judge sentences her to death for being promiscuous."
Yeah, it's just like that, lol.
Well, ckc, do you have a mort
March 29, 2007 - 02:38 ET by niner-four-whiskeyWell, ckc, do you have a mortgage? A credit card? An auto loan?
Do you understand all the terms? Do you even have copies of your mortage terms handy? Do you have your credit card agreements and all the ammendments made since you got them?
I betcha we could sit down over a cup of coffee and go over them and I could point out a whole lotta bad stuff that you don't even know is there.
Freewill trumps any corporation or lawyer
March 28, 2007 - 22:07 ET by UnsaneHave you EVER heard of "freewill"?
I can go out and buy a house right now with a VA loan right now with no money down. So, why won't I do that (much to the horror of others?)
Because I have determined that (gasp!) I can't afford to right now, and that for a purchase like that, I need to wait until the time is right.
So please, spare me the whine about evil corporate America ripping off the poor little guy, and blah blah blah. People need to learn to stop spending more than they earn and make sound financial decisions for a change, instead of crying to others to bail them out when the going gets tough.
"HAV3 TH3 BRIDG3S OF INSANITY B33N CROSS3D AND FOR3V3R R3TRACT3D???." - Meshuggah, "3ntrapm3nt", from Catch Thirty Thr33 (2005)
Good for you! So let me as
March 29, 2007 - 02:50 ET by niner-four-whiskeyGood for you!
So let me ask you this, why on earth would someone make you a mortgage loan that you can't possibly afford to pay? Doesn't that even make you wonder, just what the heck is up with that?
Hey, I'm all for personal responsibility. But there's a two way street here and it isn't right to allow predatory lending and deceptive businesses whether it is done by a conman or a multinational bank. There's nothing conservative about allowing the ripoff of working folks.
I'm not an "evil corporate" crier either. But let's face it, sometimes corporations do BAD, criminal things and leave a trail of desctruction behind them. I hate to bring up a cliche, but Enron really did screw an awful lot of people (which by the way, took place during Clinton's administration). In fact there is a huge history of corporate misdeeds and outright criminal activity that took place in the Clinton era.
There's nothing conservative about crooked business.
Freewill trumps any corporation or lawyer
March 28, 2007 - 22:07 ET by UnsaneHave you EVER heard of "freewill"?
I can go out and buy a house right now with a VA loan right now with no money down. So, why won't I do that (much to the horror of others?)
Because I have determined that (gasp!) I can't afford to right now, and that for a purchase like that, I need to wait until the time is right.
So please, spare me the whine about evil corporate America ripping off the poor little guy, and blah blah blah. People need to learn to stop spending more than they earn and make sound financial decisions for a change, instead of crying to others to bail them out when the going gets tough.
"HAV3 TH3 BRIDG3S OF INSANITY B33N CROSS3D AND FOR3V3R R3TRACT3D???." - Meshuggah, "3ntrapm3nt", from Catch Thirty Thr33 (2005)
Unsane, I agree, but I woul
March 29, 2007 - 09:39 ET by Rupert CadellUnsane, I agree, but I would also take it a step further and say that the reason the lower-to-middle class American populace is so willing to give up their meager expendable income for banal consumer products and soul-killing pharmaceuticals (by which I mean Prozac and Zoloft, not like heart medication) must be related to its belief that these are the only routes to happiness. Ask the average suburban teenager; happiness is an iPod and a fast DSL line. Jack Johnson sums up consumerism quite well: "We only get what we demand and if we want Hell then Hell's what we'll have."
In other words, I don't blame the corporations either. You hit the nail on the head with free will; I just don't understand why so many people direct their free will toward bankruptcy in exchange for brand-name electronics.
"I'm liberal, but to a degree; I want everyone to be free." -B. Dylan
Prozak & Zoloft, becaus
March 29, 2007 - 09:50 ET by sarcasmoProzak & Zoloft, because they profit big pharma which donates freely to various big-government politicians, are actually both holy sacraments. They shall not be attacked in any way as "soul killing," even though it's 100% true. Shame on you!!
JMR
Thank you for the comments
March 29, 2007 - 09:29 ET by Julia A. SeymourDear Niner -
I do read the comments, although some days I post things late in the day and then leave work so I do not always respond. Yesterday was a perfect example of that.
I appreciate your comments and agree that in some cases consumers were taken advantage of. But the purpose of my article was to point out that the media almost exclusively used those examples to malign an entire industry. I think that's wrong.
It is also wrong for the networks to insist that lenders are solely to blame for people taking out mortgages and not include any element of personal responsibility. That was the point of my story.
Thank you for your comments.
~Julia
Julia, Thank you for notic
March 30, 2007 - 19:49 ET by niner-four-whiskeyJulia,
Thank you for noticing.
My comments, though critical, were stated with due respect.
It is my observation with the media, in stories like this, that the bias is not necessarily leftward so much as it is an artifact of what I call "outrage journalism." A great deal of the MSM efforts today are focused on writing and editorialising stories that portray serious and outrageous conduct, to evoke strong emotional response in a reader.
Often, this just naturally aligns with left/liberal positions, not so much as intent, but as happenstance. Evil banker tosses widows and orphans out into the snow as in the old silent movie cliche.
On the other hand, I personally beleive that the biggest burden to working people in this nation today is not taxes, but interest. Predatory lending, rent-to-own schemes, payday loans largely prey upon the ignorant and poor, the people least able to afford it. Debt becomes a trap and the consumer lending institutions have built these traps with the intent of keeping people in revolving debt by instituting outrageous fee structures and hidden features such as "universal default" and of course, a tide of advertising designed to entice credit spending. Once trapped, the tactic is to keep the points on the credit report low, creating sub-prime customers for life.
Julia, given that you've spent considerable time watching this subject in the media, maybe you'd be a great person to write something on the subject.
I'd love nothing more than to see a crusade to educate consumers, especially those who can least afford it, how to stay out of these traps. Maybe then, the lenders will clean up their act without legislation.
It's not just in the mortgage
March 28, 2007 - 22:16 ET by rwesleyIt's not just in the mortgage either. These people pay the highest rates in insurance as well. When they ask me why its so much to insure their house, I really want to tell them that its because you have saddled yourself with so much debt and unnecessary expense that you forget to pay the bills for your insurance and get cancelled. Then, you'll have a claim and try to sue me or the insurance company, blaming us for "not seeing your bill" in the mail. I guess between the 10 credit card statements and 20 collection notices you get, it may have slipped past you.
Cavuto's take on this is that
March 28, 2007 - 22:31 ET by rubylensCavuto's take on this is that 85% of people with subprime mortgages are paying them. Instead of focusing on the 15% who aren't, he praised the ones who are. He pointed out that not all people who take subprime loans are ignorant naifs being swindled into it. For many, it is literally the only way they will be able to buy a home, so they intelligently weigh the risks and the payoff and decide to do it. And they pay for it. And they have homes. Which they wouldn't have without the availability of subprime loans.
I would never take a subprime loan, but I can see why some people would take that risk.