The American Dream causes Mortgage crisis? 10 points for the best advice. Thank you?
by Mortgage Rates on Tuesday, November 9th, 2010 | 6 Comments
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Hope, Yes, there were many business models that lead to our current condition. Some companies were very loose with their credit approval quidelines and the repackaging of loans to companies in Wall Street.
There were many home buyers who believed the lending agent for those companies using a bad business model.
Hey, I sit at home playing on Answers instead of racking up lots of debt. I pay my mortgage first and play after. People who took their equity loans and bought SUV’s, vacations and god knows what all were fools. It is the morgage companies fault, too, but wow how could people be such fools????
You’re absolutely right! While there is plenty of blame to go around, the borrowers who bought houses they KNEW they couldn’t afford (or at least SHOULD have known) bear much of the responsibility. It could be said that they are the focal point of the entire crisis. If the borrowers who made a PROMISE to pay back the money they borrowed had actually FULFILLED their promises, then the loans would not have defaulted; the lenders (any and all security holders) would have had no losses.
As you put in your question, anyone who saw someone struggling to afford a 2-bedroom apartment could never be surprised that they would struggle for a 5-bedroom house. This is such an obvious observation that it defies common sense.
So why did they do it? Perhaps they were persuaded by slick advertising or “the American Dream” of owning their own home. The government certainly does do all they can to get people interested in owning a home (and they strong-arm mortgage companies into lending to poor borrowers who often have bad credit).
In the end, the Free Market rewards good decisions and punishes stupid ones. The reason why so many people are affected by the mortgage crisis is because so many people made stupid decisions (borrowers, lenders, investors, the government, rating agencies).
It was pre-planned by the banks. They make money on the defaulted loans. The bank never loses money on anything.
I am living the American Dream and have no mortgage crisis, and I have more mortgages then I care to think about.
You are talking about The American GREED. It is greed that caused problems for people.
The American dream is still in tack. What causes the mortgage crisis, in my humble opinion, is greed. Greed on the part of the home buyer for wanting something they really cannot afford, and greed on the part of the mortgage company for wanting something they should not have at the cost of the well intended American dreamer.