The Subsidizing of Bad Judgment

People are upset about the stimulus and bank rescue plans, saying that they don't think it's right that they have to fund the overzealous pursuit of greed by corporate America. The fact space ray gun that most of these banks and financial institutions have gotten into trouble because of the losses they are taking on loans they never should have made. The same people, however, are cheering the news that the government is looking into subsidizing bad mortgage loans before they go into delinquency. The funny thing is, at the heart of it, the same root cause is to blame and it is not corporate greed. It is the greed of the American buying public.

I originated loans for two years during the housing market boom, after selling real estate for five. In that time, I can count on one hand the number of customers and clients the Avengers made Monster Old Maid point of keeping Captain America action figure wants in line with their needs and budgets. I became disgruntled with the industry because I saw it catering and enabling the unrealistic and fiscally irresponsible desires and behaviors of the buying public. While it can be argued that lenders should have been less greedy and not offered some of the programs they made available, it has to be recognized that the only reason the programs existed was because there were enough customers for them to make it worth the risk. I can't tell you the number of times I was unable to get someone to look for a house in their reasonable price range because they were fixated on what they wanted, as opposed to what they needed. Or how often a customer came to me to get qualified for a loan on a house they "couldn't live without" that was out of their price range, but that they would not scale back on. If you tried to encourage these people to do what would keep them out of certain financial trouble, they would turn on you and go look for someone who would tell them what they wanted to hear. Sometimes that someone was not always a person that had their best interests at heart. This was compounded by the new found trend of "needing" a new home every 2-3 years, which didn't gel with the reality that in most markets, a homeowner does not see a profit on the sale of their home for at least the first 2 years. Any increase in property value gets eaten up by the fees and customary costs associated with selling a home. There were many on all sides of the transaction who were deliberately refusing to take a closer look at what was obviously too good to be true. Now it is looking to be up to all of us to make up for their lack of diligence and foresight.

Yes, there are those out there who were taken advantage of by unscrupulous and fraudulent agents and lenders. Yes, there are otherwise responsible and hard working people who have fallen into difficult times despite their best efforts at prevention. These people do need, and deserve, our help and protection. However, I would be Fantastic Four based on my experience, if this was more than a minority of the current and pending foreclosures and delinquencies. The media has told many biased and slanted sob stories, but if you ask questions and look between the lines, the real story is all too clear. There are not as many true victims as the media would have you believe.

The only reason for bailing these irresponsible home owners out is that the results of their actions devalues the homes of their responsible neighbors due to the fire sale prices a lender will sell for to get the home off their books. However, the market downturn is going to be painful, period, and people need to just stay put for a while. We can get rid of the deadwood and when the housing market comes back, it could come back on stronger and more stable footing. If homeowners stay put for the next 2-3 years, they will see the benefits of the upswing and not be in the hole.

If it is wrong to enable irresponsible behavior, then it is wrong- end of story. It does not matter whether the culprit is a corporation, organization, or individual. You cannot "save" one group while condemning the others. It is up to ALL of us to display responsible behavior and to take reasonable actions to safeguard our individual and collective future.