This is a guest post from Dan Rafter at Property Crossroads.
I’ve been writing about residential real estate for the last 10 years. I edit a trade magazine serving real estate agents and mortgage lenders in Chicago. I run a popular real estate blog.
But never have I come across a topic that makes people as angry as does foreclosure relief.
Everyone knows that the number of residential foreclosures across the country is increasing. Everyone also knows that the federal government, and some lenders, are taking steps and providing financial assistance to help homeowners avoid foreclosure.
This makes sense: Foreclosures help no one. Banks don’t want to own these homes. Homeowners obviously don’t want to lose their residences. Foreclosures drag down property values in a neighborhood. A rash of people losing their homes does nothing to help local economies.
Yet whenever I discuss this issue with people who aren’t in the real estate industry, I inevitably encounter angry reactions: No one, it seems, wants to see the government help out homeowners facing the biggest financial crises of their lives.
Why? People tell me that these homeowners were greedy. They took out loans with artificially low initial interest rates just so that they could move into homes that were beyond their means. Or people will tell me that they scrimped and saved to get into their homes, and no one ever offered them any financial assistance.
I have to admit, I’m baffled by this lack of compassion. Yes, some homeowners were greedy. But just as many were steered toward bad mortgage loans and homes they couldn’t afford by the very people they hired to prevent such events from happening. Think about it: A mortgage loan officers if supposed to be the expert when it comes to home loans. If the professional you hired told you that an adjustable-rate mortgage was the best choice for you, and presented you with a long list of numbers that supposedly proved it, would you have the knowledge to argue?
Yes, homeowners should never rely blindly on the advice of their real estate agent or mortgage loan officer. But these professionals have an obligation to their clients, and too many of them shirked it.
So fill me in, all you angry and responsible homeowners out there: Why are you so ticked that some homeowners may receive assistance to avoid foreclosure?
Read Dan Rafter’s near daily real estate thoughts at www.propertycrossroads.com.
I get that reaction from people outside of the real estate industry as well. They pretty much rely on explanations like "these people were lazy, didn't read their mortgage documents, and didn't deserve loans in the first place so they don't deserve a bailout now."
Of course, that's true in some cases, but certainly not every person who's lost a job or has faced a medical emergency is in foreclosure because of greed. But it seems as if the people who were greedy and irresponsible are the ones that are the most exposed in the media; people who are thinking of walking away because the house declined in value, or people who used to be in the mortgage industry and have cut back from a Corvette to an SUV.
Too much exposure of these types of homeowners causes the public to believe that anyone in foreclosure is simply lazy or suffering from karma.
The anger is also a condition fostered by the media, though. The debate is about what is to be done with public funds to help homeowners, all the while the Fed gives bailouts directly to banks. Presenting the issue in this light distracts attention away from inflating the currency to help out banks.
One final issue is that people who are experiencing higher prices at the gas pump and the grocery store do not want to hear complaints from people about their higher mortgage payments. If we can bail out people with ARMs, why not bail out people paying too much for their gasoline, or too much for their milk? And do you take money away from people who can't afford groceries and give it to people who can't afford their mortgages?
These seem to be some of the issues making people angry and more opposed to funding a bailout of homeowners. Now, if they could be just as angry as bailing out the banks, that anger might translate into something productive and get rid of corporate welfare. We could afford a lot more public welfare if we didn't have so much corporate welfare.
Posted by: foreclosurefish | April 16, 2008 9:21 AM | Permalink to Comment