Galen Wolffit (wolffit) wrote,
Galen Wolffit

Sub-prime Blame Game

For those who haven't been following the story, basically the past five to ten years have seen big changes in the mortgage lending market, and the widespread use of a number of "creative" mortgage plans such as interest-only or adjustable rate loans, which offer borrowers a very low introductory rate or payment, but have the risk of a significantly higher payment after a few years. These programs have allowed people to buy more house than they could afford, and other programs have also allowed people with less-than-good credit to get loans they wouldn't otherwise qualify for. Recently, delinquency and foreclosure rates on these loans have been skyrocketing, as declines in the housing market and increasing interest rates have left people unable to pay the rising mortgage payments.

CNNMoney has an article (Sub-prime Blame Game) pointing the finger at various groups, trying to describe whose fault it is. They blame mortgage brokers, appraisers, regulators, lenders, Wall Street, and real estate agents.

They left one very important group out.

Home-buyers who bought houses they could not afford and took loans they could not repay. Are they entirely to blame? As with the other groups, no. But these loans didn't have any "hidden" costs - right upfront, the loans describe what the rate is, how long the rate is valid, and what happens after the introductory term. Sure, some of them are complicated and a naive first time home-buyer might not understand everything, so these people are not 100% to blame for their current misfortune, but any attempt to point fingers at those responsible, which does not include a finger pointing at the people who took these risky loans, is just plain irresponsible.

But I guess we should be used to the idea of people trying to blame anyone and everyone but themselves. It's almost become the motto of this country. "It's not my fault!"
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