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

Edited April 11, 2009 by Elphaba

[jadams_4040]

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]

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]

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]

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.

Edited April 11, 2009 by Just_A_Guy

[Palerider]

There were so many Politicians that knew and seen this coming....what did they do...NOTHING....you can blame the last 8 all you want....there is plenty of blame to go around on both sides of the aisle...for those of you with tunnel vision...lets see.....Barney Frank.....Nancy Pelosi.....should I name more....they all knew it....no one wanted to blow the whistle...all they care about is getting VOTES...

The House and Senate did nothing to stop it......

[bytor2112]

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.:)

Your comments have no basis in reality. You are a non stop campaign commercial for the Democratic party....seriously, do you even bother to research anything on your own, or do you just enjoy parroting the ignorant non sense from the left????

[bytor2112]

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

True, however, a mortgage is actually viewed as a liability, and the so-called homeowners were not homeowners at all....just mortgage holders.

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

.

Forced into foreclosure? If you don't pay your power bill are you forced in to not having power?

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

Not homeowners. The banks owned the home and are now taking them back because of non-payment.

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 mortgage

s.

No, but they did recklessly borrow money and on over priced homes. Foolish indeed. It's not quite as simple as you make it sound, but lenders share a portion of the blame as do the borrowers and especially our government.

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

Now this comment is just absurd. Their loans were safe and they could continue to live in there homes as long as they paid their mortgage.

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

Baloney. Personal responsibility is not something lefties are comfortable with, but in this case......foreclosures are the fault of the borrower.

Edited April 11, 2009 by bytor2112

[hordak]

2 brothers raised in the same house by the same parent. Both brothers have the same size family and about the same income. Both decide to buy a home at about the same time.

Brother 1 looks at all the stuff the banks have to offer, Flex rates/ interest only, arm. etc. and decides to go with a 30 years fixed rate as knowing what the payment will be seems like a smart idea.

Brother 2 looks at all the stuff banks have to offer, flex rates/ interest only, arm. etc

and decided to go with some low at the beginning, jump up in 3 years because he thinks he will have a raise by then (instead his wife quits her job , he has another kid, and never gets the raise) he is on the verge of losing his home.

Who do we blame?

[Palerider]

2 brothers raised in the same house by the same parent. Both brothers have the same size family and about the same income. Both decide to buy a home at about the same time.

Brother 1 looks at all the stuff the banks have to offer, Flex rates/ interest only, arm. etc. and decides to go with a 30 years fixed rate as knowing what the payment will be seems like a smart idea.

Brother 2 looks at all the stuff banks have to offer, flex rates/ interest only, arm. etc

and decided to go with some low at the beginning, jump up in 3 years because he thinks he will have a raise by then (instead his wife quits her job , he has another kid, and never gets the raise) he is on the verge of losing his home.

Who do we blame?

according to popular opinion you blame Bush....afterall he caused the hurricane...the 9/11 attacks everything we are going thru today ..:)

[TheyCallMeMom]

Brother 2 looks at all the stuff banks have to offer, flex rates/ interest only, arm. etc

and decided to go with some low at the beginning, jump up in 3 years because he thinks he will have a raise by then (instead his wife quits her job , he has another kid, and never gets the raise) he is on the verge of losing his home.

that sounds a bit like gambling if you ask me.....

[NeuroTypical]

Yeah, homeowners didn't create any of the crappy unsafe loans. They just went out and got them.

So tell me, it's also possible to go fifty grand into credit card debt. Should we also avoid any blame if we decide to? After all, I can figure out a way to convince myself such insanity is "the best thing for my family, for my children. I want us to live in safer neighborhoods, proven schools, and yes, even a better lifestyle. Lord forbid!"

LM

[Just_A_Guy]

Not homeowners. The banks owned the home . . .

And at least some people realized this back in 2002. This article seemed a lot funnier then.

[Kawazu]

Even with all the news coverage, lately, understanding recent economic troubles can be a bit daunting. The below video describes key terms and outlines a few basic causes of our economic depression. Additionally, the video clip has been produced with professional quality. Enjoy. (Nonpartisan.) (Total running time: 12 minutes.)

Overall, I learned more from this than I have from watching the news.

Cheers,

Kawazu

[talisyn]

And at least some people realized this back in 2002. This article seemed a lot funnier then.

Now it's just very very sad. So who's to blame..the banks, the non-bank people, or those who have indoctrinated us into thinking every American should own a home because if you don't you're abnormal?

My family lived in a bus out in the deserts of S. Cali for 10 years. I learned a lot during that time, mostly that it's ok to live without credit of any kind and paying cash is a good thing. I may not be able to buy a car for $30,000..but you can bet I can pay cash for a $9,000 one

[Elphaba]

Even with all the news coverage, lately, understanding recent economic troubles can be a bit daunting. The below video describes key terms and outlines a few basic causes of our economic depression. Additionally, the video clip has been produced with professional quality. Enjoy. (Nonpartisan.) (Total running time: 12 minutes.)

Overall, I learned more from this than I have from watching the news.

I haven't seen Part 2, but I posted Part 1 in my OP of this thread. I hope others didn't miss it, because it is excellent.

Well, I guess the fact that you posted it here means people won't miss it, so all is good.

This video perfectly illustrates my point:

No one could have possibly understood everything outlined in this (these) videos, and it's absurd to have expected us to.

Elphaba

[Elphaba]

Your comments have no basis in reality. You are a non stop campaign commercial for the Democratic party....seriously, do you even bother to research anything on your own, or do you just enjoy parroting the ignorant non sense from the left????

Bytor,

Do you not recognize you do the exact same thing?

Few people are as full of ideaology as you are. I readily admit I am one of them. But the fact that you' would rant at someone else, when you do the very same thing, is really bad form.

Elphaba

[RachelleDrew]

The families living on each side of us are losing their homes. My family is not, which is strange since we make far less than they do. By far less, I mean we make like 40 thousand a year and they make over 100 thousand a year.

Now how is it that we figured out to save our money and buy a house in cash instead of letting the bank get our hands behind our backs? We refuse to get loans and gamble with credit, yet we have to pay for their house anyway? Why didn't they sell their fancy vehicles if they knew they were having trouble making their house payments? Why didn't they disconnect the satellite television? Why didn't they pull their kids out of expensive private school? Why, why why?

It doesn't take a genius to figure out that if you don't have the money, you SHOULDN'T BUY IT.

I feel no pity for most people who lost their homes. It's one thing if you were truly doing everything in your power to save yourself from the situation, but for every five have-nots I will meet fifteen will-nots.

The lenders and the borrowers share equal blame in this one, and I shall continue to blame them. Although I don't so much care myself, because I actually *ahem* own my house, not the bank.

[BenRaines]

RachelleDrew, do you mean to tell me it wasn't the greedy bankers, stock manipulators, mortgage lenders who caused your neighbors to lose their house but it was living beyond their means? That is impossible. Everyone was to become millionaires by buying and trading, not living in, the houses. Notice I say houses because many were not bought to be their home, only a stepping stone to future riches.

Most of the people I deal with in Idaho have been in their home for ten years. Never had a hybrid mortgage or sub prime or any other exotic type of financing. Hard working, ethical people.

Ben Raines

[bytor2112]

Bytor,

Do you not recognize you do the exact same thing?

Few people are as full of ideaology as you are. I readily admit I am one of them. But the fact that you' would rant at someone else, when you do the very same thing, is really bad form.

Elphaba

Oh, I think many people are as full of ideology, Elph. Jadams comments are not factually based and frankly they annoy me and believe it or not, it's not that easy to annoy me.