Here is an article that sums it all up pretty well, and does a pretty good job of just explaining and not blaming. Though this quote pretty much sums up my feelings. They don't mention that the likes of Barney Frank made it a point to promote this kind of risky lending:
"Faced with this demand, lenders starting making more loans to riskier borrowers, including people who might not be able to afford their mortgage payments in the future and even many with no proof of income.
When prices were rising, this wasn't a problem. The risk of loan foreclosure or default was limited because many homeowners were able to sell their house for more than they owed and make a profit.
But once prices topped out and began falling, loan defaults and foreclosures started shooting higher as homeowners found it more difficult to sell their house. This created problems not just for subprime borrowers but even for those with good credit and income."
No worries, there's very little risk.... I mean they can just sell their house if they need the money. Which would make them, what? Homeless?????????
4 comments:
I keep hearing people blaming Alan Greenspan for keeping interest rates too low for too long.
I agree with that statement also.
Yay Government control.
I think this sentiment takes the responsibility off of the people who should be most culpable. The borrower.
Banks had money to lend and that money was cheap. They were willing to lend to just about anybody which was their assumption of risk. But, the consumer (borrower) also had a responsibility to borrow within their means. Many did not, playing a speculative game that prices would in fact go up and they'd make a fortune, which worked for some and not so well for others as we are seeing.
Ultimately, if consumers had borrowed within their means instead of borrowing more because it was available and buying things they could not afford, this could have been avoided to some degree. Not curbed completely, but definitely minimized. I think the consumer gets off far too easily here as now it will be our tax dollars paying for these consequences.
This hits home for me because I did not buy when I thought I chould because prices were too high. They were willing to lend me just about as much money as I make, just because I had good credit. I chose not to get stretched out that far. Turns out if I did, the government would have bailed me out so by being responsible it's actually going to cost me money.
There's an old saying in the credit world..."There's only two reasons people don't pay their bills, they can't, or they won't, neither are acceptable reasons."
Agreed. It isn't much of a shock that the majority of foreclosures happened in So Cal and Florida. Many people bought in areas they wanted rather than what they could afford. Eyes were too big for their wallets.
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