The Mortgage Crisis And Its Red Tape
There is a fine line that the government has to draw when it comes to the mortgage crisis. But before we even begin to discuss that, we need to determine whether or not this is even the government’s problem.
Here are the sides of the story as I see it. One side says let irresponsible borrowers lose their mortgages and may they have their properties foreclosed because they were not making wise decisions. The other side says that people were misled by companies like Fannie Mae, or that there is too much red tape and other loopholes that prevent people from making correct decisions. Of course, I’ll definitely say that it’s both, and that’s a problem. How can anyone distinguish the responsible, misled borrowers from the irresponsible borrowers?
I’m all for regulating the housing market when it comes to how business is conducted. Persuading home buyers from getting a home using shrewd business tactics that hide the truth about refinancing options etc. should be frowned upon and should be controlled to some degree I think. However, we cannot be bailing out whoever we please. In the end, the responsibility goes to, well, the home buyer. No one should lean on the government for any sort of financial help, as that’s not really its function.
I agree that we are in both a credit and mortgage crisis, however it’s really the American people that got us here if you think about it. That’s not to say that the big credit and mortgage companies aren’t at fault, but in the end the combination of some irresponsibility as well as loose regulation at these big companies has taken a turn for the worst, all at once. I’m glad that at least we’ll see a tightening up of credit as I think people really need to prove that they deserve to have credit.
Of course I’m no expert, but this is how I see things as they are now. Are more innocent people hurt by this than non-innocent? Should the credit and mortgage companies have stricter controls? Was regulation to blame? I’ll definitely look into this of course, but I’d like to know your thoughts as well.
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JollyRoger Said,
December 16, 2008 @ 1:30 am
the “irresponsible borrower” is another wingtard myth, designed to deflect the blame for the crisis from where it properly belongs.
This myth has also been debunked.
Alex Said,
December 16, 2008 @ 11:29 am
it’s interesting how far off this country is from say 6 months ago (before the huge crash)
- Alex
Alberto Said,
December 16, 2008 @ 11:41 am
@JollyRoger: perhaps you’re right, but here’s my question. Should irresponsible borrowers be bailed out along with everyone else? They may not be the cause of the crisis, but do we give them a free pass because they happen to be in trouble at the same time as the responsible borrowers?
@Alex: There’s no doubt in my mind that we’re in bad shape. I know the US will bounce back, it’s just a matter of when (and I don’t expect a recovery for a while).
JollyRoger Said,
December 17, 2008 @ 3:16 am
The answer to that depends on how quickly you want real estate to come back. If you are anxious to fix this mess, then some people who got in over their heads are going to have to be helped; there were a lot of people who basically got bamboozled into signing up for ARM loans who were irresponsible only to the point of not understanding what it is they had done (I know a realtor who gave me a hell of an education on how the final terms of the loan agreement would be introduced 5 minutes before the signing, usually in a 10 minute scheduled meeting.) They shouldn’t have done it, but our fortunes are tied up with theirs. I personally would prefer to see real estate recover sooner rather than later.
Alberto Said,
December 17, 2008 @ 11:57 am
That’s a valid point, and honestly I agree; they get to get away with it to help the greater good.
Armen Shirvanian Said,
December 17, 2008 @ 2:27 pm
While it is true that borrowers and lenders were being as intent on making or keeping more money for themselves, one would think that the foundation they are a part of would be able to account for human nature. It would be the case that either the foundation was not built in a way that would prevent the problematic cycle to occur, or that individuals involved in the structuring behind the system altered items for their own benefit.