Stop Blaming the Homeowners

[Elphaba]

I keep reading, all over the net as well as here on lds.net, tirades against homeowners, blaming them for the financial crisis, and frankly, it is just plain mean.

Many Americans bought their homes because they believed in the age old value of homeownership and thought it would make a sound investment.

They believed it was the best thing for their family, for their children. They wanted them to live in safer neighborhoods, proven schools, and yes, even a better lifestyle. Lord forbid!

Now the American Dream of homeownership has turned into an American nightmare with over two million people being forced into foreclosure. Ten million are having trouble making their payments. Perhaps another six million homes will face foreclosure by 2012.

That is 18 MILLION homeowners, of which the vast majority are mom and dad and two-and-a-half kids.

Eighteen million Americans did not try to take advantage of you by recklessly borrowing money for a home. Eighteen million Americans believed their bankers who told them they could afford these mortgages.

Eighteen million Americans believed their bankers when they told them their loans were safe.

The banks that lied to eighteen million Americans are to blame.

In all of the research I’ve done, no one says it better than Church Warnock, a self-described small-church pastor:. He doesn’t write for the Wall Street Journal, or the National Review, but he has a flock of people who are facing financial disasters. He says:

• Homeowners didn’t package and slice up mortgages into untraceable, unmeasurable and risky economic instruments.
• Homeowners didn’t relax the rules allowing banks to increase their debt-to-deposits ratio.
• Homeowners didn’t run the SEC, Fannie Mae or Freddie Mac whose lax oversight and loose policies allowed the Bernie Madoffs to steal billions, and predatory lenders to defraud millions.
• Homeowners didn’t create the shellgame called credit default swaps, a house of cards created by the lenders to provide the illusion that real “insurance” covered their loan portfolios.
• Homeowners didn’t create the housing bubble, or inflate the market price of property, or assure others that “your house value will always go up.”
• Homeowners didn’t rate the riskiest of financial instruments as sound and solid, like the rating agencies did. Those same agencies are supported by the companies they rate.

Eighteen million Americans had never heard of “Sub-Prime Mortgages, “Collateralized Debt Obligations,” or “Credit Default Swaps.” I had never heard of these things until I started researching this, and I’m not stupid.

I’ve posted this video before, but this is a good time to post it again. It’s called The Crisis of Credit, and it explains the complicated steps that put these risky mortgages in our hands. To expect the average person to have known all of this is absurd, and even cruel.

Were there abuses? Absolutely. Was there carelessness? Yes. Should we have been more thorough and self-educated? Obviously some of you were.

But we’re not all bankers, or financial gurus. We don't have financial consultants to safeguard our investments. Heck, we don’t all have the TIME to research these loans.

Additionally, how should it have occurred to us our banks might be lying to us?

A relative handful of rich Americans, who took advantage of relaxed regulations, complicated financial schemes, and just plain greed and even ruthlessness, are more to blame for this financial crisis than even one of these eighteen million famlies.

Spread the blame where it belongs, not totally on the backs of Americans who were trying to live the American Dream by purchasing the ONE investment we’ve all heard, all of our lives, is sound, profitable, and safe.

Elphaba

[jadams_4040]

Originally Posted by Elphaba

I keep reading, all over the net as well as here on lds.net, tirades against homeowners, blaming them for the financial crisis, and frankly, it is just plain mean.

Many Americans bought their homes because they believed in the age old value of homeownership and thought it would make a sound investment.

They believed it was the best thing for their family, for their children. They wanted them to live in safer neighborhoods, proven schools, and yes, even a better lifestyle. Lord forbid!

Now the American Dream of homeownership has turned into an American nightmare with over two million people being forced into foreclosure. Ten million are having trouble making their payments. Perhaps another six million homes will face foreclosure by 2012.

That is 18 MILLION homeowners, of which the vast majority are mom and dad and two-and-a-half kids.

Eighteen million Americans did not try to take advantage of you by recklessly borrowing money for a home. Eighteen million Americans believed their bankers who told them they could afford these mortgages.

Eighteen million Americans believed their bankers when they told them their loans were safe.

The banks that lied to eighteen million Americans are to blame.

In all of the research I’ve done, no one says it better than Church Warnock, a self-described small-church pastor:. He doesn’t write for the Wall Street Journal, or the National Review, but he has a flock of people who are facing financial disasters. He says:

• Homeowners didn’t package and slice up mortgages into untraceable, unmeasurable and risky economic instruments.
• Homeowners didn’t relax the rules allowing banks to increase their debt-to-deposits ratio.
• Homeowners didn’t run the SEC, Fannie Mae or Freddie Mac whose lax oversight and loose policies allowed the Bernie Madoffs to steal billions, and predatory lenders to defraud millions.
• Homeowners didn’t create the shellgame called credit default swaps, a house of cards created by the lenders to provide the illusion that real “insurance” covered their loan portfolios.
• Homeowners didn’t create the housing bubble, or inflate the market price of property, or assure others that “your house value will always go up.”
• Homeowners didn’t rate the riskiest of financial instruments as sound and solid, like the rating agencies did. Those same agencies are supported by the companies they rate.

Eighteen million Americans had never heard of “Sub-Prime Mortgages, “Collateralized Debt Obligations,” or “Credit Default Swaps.” I had never heard of these things until I started researching this, and I’m not stupid.

I’ve posted this video before, but this is a good time to post it again. It’s called The Crisis of Credit, and it explains the complicated steps that put these risky mortgages in our hands. To expect the average person to have known all of this is absurd, and even cruel.

Were there abuses? Absolutely. Was there carelessness? Yes. Should we have been more thorough and self-educated? Obviously some of you were.

But we’re not all bankers, or financial gurus. We don't have financial consultants to safeguard our investments. Heck, we don’t all have the TIME to research these loans.

Additionally, how should it have occurred to us our banks might be lying to us?

A relative handful of rich Americans, who took advantage of relaxed regulations, complicated financial schemes, and just plain greed and even ruthlessness, are more to blame for this financial crisis than even one of these eighteen million famlies.

Spread the blame where it belongs, not totally on the backs of Americans who were trying to live the American Dream by purchasing the ONE investment we’ve all heard, all of our lives, is sound, profitable, and safe.

Elphaba

Thank you for saying all the things i wanted to say!

[lestertheemt]

In many aspects I agree with you. Home ownership is a fine goal and one in which we should all obtain. However, not all of us can afford $300,000 to $500,000 (or more) homes. We, as a society need to live within our means. We can't expect to have everything all at once, it simple takes time. I truly feel for the ones who are attempting to own a home that they "truly" could afford and due to unemployment are losing it.

[Elphaba]

Originally Posted by lestertheemt

In many aspects I agree with you. Home ownership is a fine goal and one in which we should all obtain. However, not all of us can afford $300,000 to $500,000 (or more) homes.

The problem with this is they bought these expensive homes thinking they were an investment, and why should they have thought otherwise?

My husband and I bought our home with one of these loans. When we sold it, we made a $50,000 gross profit, on paper anyway. We benefitted from one of these loans.

Millions of people benefitted from these loans. They were told a $300,000 homes was a better investment than a $90,000 home, and for a long time they were right.

I realize there is blame to share, but this incessant "why should I pay for your stupidity," ignores the real culprits.

I don't blame people for not wanting to pay for other people's mistakes. I get that. It's that their anger, and rage, is directed at the, for the most part, innocent people.

These people didn't want to fleece anyone. They didn't do this on purpose, and it is mean-spirited to keep at them when they are just decent people who were misled, and are in trouble right now.

Elphaba

[lestertheemt]

I am not an investor nor am I financial savvy, but I do know that with any investment there is a risk. It is my understanding that before on leaps....one needs to be prepared for the fall.

[jadams_4040]

Originally Posted by Elphaba

The problem with this is they bought these expensive homes thinking they were an investment, and why should they have thought otherwise?

My husband and I bought our home with one of these loans. When we sold it, we made a $50,000 gross profit, on paper anyway. We benefitted from one of these loans.

Millions of people benefitted from these loans. They were told a $300,000 homes was a better investment than a $90,000 home, and for a long time they were right.

I realize there is blame to share, but this incessant "why should I pay for your stupidity," ignores the real culprits.

I don't blame people for not wanting to pay for other people's mistakes. I get that. It's that their anger, and rage, is directed at the, for the most part, innocent people.

These people didn't want to fleece anyone. They didn't do this on purpose, and it is mean-spirited to keep at them when they are just decent people who were misled, and are in trouble right now.

Elphaba

It was 8 years of letting big business run this country unbrideled; to me it just seems awfully funny how myself along with millions of others; {
across the world} saw this coming 7 years ago; the little working family in this country could only be robbed so much; then there is no more; this is what happened to our economy; big business, {with bush supporting them} simply do not understand that there big profits come from people working and buying products; not from cheating every last dime out of the downtrodden and little person whom scrapes by in this world; they have the mentality of; "well; if we give more money to big business; then big business hires more workers"." It simply does not work this way! the worker needs the money to be able to support the big business; they take everything from us;... they fail too; I think an awfull lot of them have figured this out as of late; but unfortunately there are still some whom just dont get it and probably never will. Thank God we now have someone in the white house whom has the guts to stop kissing A## and is actually keeping his campaign promises to the average american citizen.

[TheyCallMeMom]

While I blame greed for it all.. The greedy are not all republicans.. so lets back off of the "8 years" thing..

economically the downturn started way before that..

as far as mortgages go, I agree with lestertheemt. I also want to add that many of the foreclosed homes are people who bought more house than they could afford.. yes, the banks lent the money, but the owners, by their own free will, signed the contracts

we are counseled on living providently. Living within our means, buying a modest home. etc.. but even as members many have not followed this counsel.

Homeowners need to take responsibility as well.. remember, it takes two to tango.. even in real estate

[TheyCallMeMom]

Originally Posted by jadams_4040

Thank God we now have someone in the white house whom has the guts to stop kissing A## and is actually keeping his campaign promises to the average american citizen.

the democrats are now in a position to buy all the large companies in the US..

from banks, to auto manufacturers.. the government will own it..

and you guys thought republicans were scary... wait til you get a load of the democrats.......

[peanutgallery]

You don't have to be a rocket scientist to know that if you make $4000 a month, you cannot afford a $2000 a month mortgage even if it is a good investment. Sure the lenders were sharks, but anyone who takes out credit on something that siimply cannot afford is accountable for their own decisions. No one held guns to their heads and if they read their loan docs, they would have known.

[Just_A_Guy]

But we’re not all bankers, or financial gurus. We don't have financial consultants to safeguard our investments. Heck, we don’t all have the TIME to research these loans.

Buying a house is not like buying groceries, or even like buying a car. When you're putting a six-figure amount of money on the line, you don't have time not to research this stuff.

Additionally, how should it have occurred to us our banks might be lying to us?

The banks are selling a product. You never take a salesman's representations at face value, no matter what he's selling. This is basic stuff. You don't trust the guy on your doorstep selling you a revolutionary new vacuum cleaner for a couple hundred bucks. Why do you trust the guy at the bank selling you a loan package for tens of thousands of dollars?

Are the banks guilty? Yes.

Are the homeowners innocent? No. The same greed that controlled the bankers, controlled the homeowners. It just manifested itself in different ways. When I hear homeowners argue that they "didn't do this on purpose, and it is mean-spirited to keep at them when they are just decent people who were misled, and are in trouble right now", I see a red-flag warning me that they still have the same sense of entitlement that made them easy targets in the first place.