There really are some victims in the housing mess
I know most of us hate to see the government bail people out for being greedy. And, yes, some people were exceedingly greedy when they took out mortgage loans for their current homes.
I’m referring here to those folks who took out adjustable-rate mortgages or interest-only loans so that they could benefit from artificially small — and, it’s important to note, temporary – monthly mortgage payments, all so they could get into that larger, more expensive house, a house that normally would be too much for their financial wherewithal.
Yes, some of these people will benefit from the federal government’s plan to bail out homeowners who face suddenly higher mortgage payments once their interest-only loans or adjustable-rate mortgages adjust.
But, and maybe it’s the holiday season stirring me to write this, let’s have a little compassion. There are many, many homeowners out there who truly were victimized by mortgage loan officers who convinced them to take out inappropriate loans. These loan officers knew that when their loans adjusted, these people would have no chance to make their monthly payments. Yet they pushed their borrowers into them anyway.
I know that in the United States, we believe in personal responsibility: You make a mistake? You fix it on your own. But buying a house is a challenge. Many people do it just once or twice in their lives. They hire real estate agents and mortgage loan officers to help them do it right. They’re relying on their advice. If a loan officer that they hired steers them wrong, who is really at fault?
So this Christmas season, when you feel like complaining to your neighbor about all those greedy homeowners getting a break from the government, stop and think: Remember that many of these so-called greedy homeowners are actually victims of unscrupulous lenders and uninformed real estate agents all taking advantage of the U.S. obsession with homeownership.
(Remember, too, that the government’s mortgage bailout — which is, unfortunately, only a very small step in addressing the possible wave of foreclosures that may soon hit this country — will cost you, the average taxpayer, barely anything, especially when compared to some other big mistakes the government is paying for … like, well, a largely unneccessary war it’s waging in Iraq.)
I have lots of compassion, but honestly we do need to discuss the role of personal responsibility in all of this. There is no question that fraud contributed to the mortgage meltdown; unscupulous Loan Officers preying on uneducated and uninformed consumers. But, I would guess that the greater majority of people who find themselves in trouble today knew quite well what type of loan they were taking out. Perhaps they didn’t take the time to read all of the diclosures; to ask all of the questions they should have asked. But, keep in mind, the mortgage industry is highly regulated and the Truth-In-Lending Act requires proper disclosure of the terms of the loan, and the costs associated with it. Yes, these disclosures can be daunting for the average consumer, but shame on the folks who didn’t make certain that they understood what they were getting into.
My suggestion is for the regulators to aggressively go after those in the industry who committed fraud; to require all persons involved in taking mortgage loan applications from consumers to be certified, by receiving so many hours of education credits; and, to require continuing education in order to maintain one’s certification. Until the mortgage industry joins other professions and creates professional standards, codes of conduct and ethics, and requires those who make a living in the industry to be held to these standards, then we should expect for this mortgage meltdown not to be the last.
I agree with most of the comment above. I especially agree with the call for more professional standards in the mortgage-lending industry. I know that many of the top mortgage lenders want tougher standards, too. If the best in the business support it, I do, too.