12 September 2007
Foreclosure doesn't just happen to people who don't make their mortgage payments. Your homeowner's association (HOA) can take your house or condo if you're not careful. In one case, a disabled California man lost his home in a foreclosure sale because he was $123 behind on his homeowner's dues. The house was worth $280,000. Unfair? Abusive? You bet!Read More »
Taking Responsibility
By Gina GardnerNFNS Columnist
The media, mortgage professionals, financial market insiders, and consumer advocates have been playing one huge game of "keep away" with the blame for the mortgage mayhem in the subprime and Alt-A markets. Politicians are getting in their sound bites with "calls for sweeping reforms" and "more oversight" ad nauseum. And missing the point.
The bottom line is that the vast majority of these loans were made with full disclosure and the lenders followed all applicable state and federal laws. There is no reason that the borrowers, presumably competent adults with the legal capacity to sign binding contracts, should be claiming "victimization" now. Lenders do disclose what payments and rates are, and monthly statements on option ARMs do show the balance and what payment it would take to fully amortize the loan. Alt-A, subprime, and option ARMs can be great loans when taken for the right reason and with a plan in mind.
Because people got greedy and wanted to show off in a house they couldn't afford, or hoped to speculate in an insane housing market and got bitten on the butt is no reason to do away with loans that the majority of borrowers have handled successfully, and that have been in part responsible for a significant increase in home ownership according to the Federal Reserve. Because some lenders were foolish enough to make loans that obviously couldn't be repaid is no reason to penalize the more prudent ones in the industry. And the fact that some borrowers and lenders screwed up is certainly no reason for taxpayers to take a hit bailing them out. Let them go down as they deserve to. The industry will be stronger for it in the end.
About the Author
Gina Gardner writes for an online media company specializing in mortgage and business issues. Her career highlights include auditing and tax with Deloitte, systems consulting with Experian, and loan consulting with Centex. She earned her degree in Financial Management from the University of Nevada.