DJ28

His mind is not for rent, to any god or government

Who’s to blame for the mortgage crisis?

Those of you who have read my blog in the past know I like to blame alot of things on big government mismanagement. This time they get off the hook a little bit. The only thing they are responsible for as far as the mortgage meltdown is concerned is lulling people into a false sense of security.

People know that big government regulates virtually every business enterprise in our “free” society. People think because of these regulations they are immune from being ripped off. Especially on what is the biggest most important purchase you may ever make. Many have now learned the sad truth that government regulations are ineffective.

That being said. In most cases the blame here lies on the consumer.Yes that’s right, people who didn’t do their homework and made a bad uneducated decision. People believed the mortgage broker when he was telling people they could afford something they couldn’t. People believed the broker when he told them the adjustable rate was the way to go. Mortgage brokers are paid on commission! Basic common sense should tell people that anyone who makes commission is going to try to make a sale so they can make money! There are always “snake oil salesman” who are more that happy to drive you to financial ruin if it makes them a few bucks. Their methods got past the regulators, and guess what? When the regulators finally catch up the methods will have changed again! You have to look out for your own well being. If you don’t think you can afford something DON’T BUY IT! Especially a home, check out your options before jumping in the shark tank. This goes when dealing with any commission based salesman, from mortgage brokers to stock brokers to car salesman all the way down the telemarketer that calls you when you’re eating dinner.

I don’t feel bad for anyone who got stuck with a adjustable mortgage. You gambled and you lost, no different than the blackjack table. Even with my paltry public high school education I could see that was a suckers bet. I bought my house in February of last year. My scumbag broker laid all the options out in front of me. The adjustable, the interest only etc and he sort of mentioned under his breath there was a fixed rate option available. He started pushing real hard for the adjustable, telling me how great it was and that I could refi to a fixed after a few years ect. That immediately set off alarm bells in my head. I asked myself “Why is he pushing this so hard on me?” I suspected he made a higher commission on the ARM’s and I later found out from a friend who used to be in the business that I was right. The “ARM” would have saved me $60 a month for 3 years and then the rate shot up to god knows what. By my math $60 times 36 months = $2,160. That’s what I would have saved over 3 years. Closing costs on refinances are somewhere in the range of $5,000. So over the course of 3 years I would have spent $2,840 MORE!!! to gamble with my financial future. And everyone who got stuck with one of these bad products would have known as much if not more than me if they had done their research.

The bottom line sounds cruel and thoughtless. Perhaps it is but it needs to be done. The people and banks who made these bad deals need to be allowed to go down. No bailouts for people or private businesses that made bad choices. I don’t want my taxes to pay for people not being prepared. I prepared myself, why do I have to pay for the repercussions of others mistakes?

I understand there are some people out there who were legitimately defrauded by crooked mortgage brokers and this post obviously doesn’t apply to them. They should use the full power of the civil and criminal court system against those who perpetrated this fraud.

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May 2, 2008 - Posted by | Politics | , , , , , , , , , ,

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