Tuesday, June 24, 2008

A momentary side-step

No knitting content today. Not that there hasn't been knitting, mind you, but I don't have pictures yet and I don't have time to take them properly, either, so you'll have to wait a little bit.

But I do feel the need to say something.

I don't watch a lot of TV news. It just seems like it's a battle of which station can have the most sensational, fear-inducing, jaw-dropping approach to some tragedy or another -- or the most Norman Rockwell-esque look at something cute if it's a slow "news" day -- and I'd rather spend my time elsewhere.

But this morning, after watching a show I DVR'd last night, the Today show popped onto my screen and I caught a bit of the conversation between Al Roker and a woman who's name I didn't catch. The discussion was about subprime mortgages and the continuing fallout from them. I guess NBC figures just listening (or reading closed captioning) isn't informative enough, so they have little summarizing headlines imposed below the framed picture of the folks having a discussion. In this case, it read something like, "More blacks forced into subprime loans than whites." (I'm paraphrasing since I turned the TV off before thinking of making sure I had a direct quote.)

Now, before you think I'm going to rant about a race issue -- I'm no Don Imus, after all -- that's not the bit I'm quibbling about. The phrasing that rankles me is "forced into." WHAT?! You mean there are actually mortgage lenders out there who are running around town kidnapping people, chaining them to desks, and depriving them of food, drink, and all matter of comforts until they sign subprime mortgage documents?! How did I miss this?

Come on, people. George Carlin must be turning over in his -- well, wherever he is right now.

No one now or in the past has forced anyone into a subprime loan. If you didn't ask questions when they offered you a zero-down, no-interest for two years (or whatever) adjustable-rate loan; if you didn't pay attention when the details were explained to you; if you took out a mortgage for more house than you could afford; if you believed you really could get something for virtually nothing, well then, the onus is on you, isn't it?

I remember the first house my ex-husband and I bought. It was during the '80s when interest rates were in the 11%+ range. We took out an adjustable-rate mortgage because it was about the only thing you could afford to get at the time and we were young and wanted a house. Fortunately, we had a pretty good income at the time. We knew the risk. We knew that in two years the thing could go up 2% and that we'd have to refinance at that point because we probably wouldn't be able to afford the payment increase. We knew we were paying PMI* on top of the high interest rate. We took what we felt was a calculated risk because we also knew that home prices in the San Jose, California area were booming at the time.

After two years, we did refinance the house. Our income had gone up and so had our equity. We were able to refinance at a lower rate and get out from under the PMI at the same time. Our calculated risk paid off.

And yes, I was nervous for those first two years because I knew it could have gone differently.

Many people who signed subprime loans didn't fare as well as we did. I remember when I first heard about zero-down, no-doc loans. I thought the banks were crazy taking that big of a risk. I thought borrowers were even crazier. Housing prices couldn't keep going up and up forever and interest rates weren't going to go from 7% to 0%. There just wasn't as much wiggle room as there was in the '80s.

Yet banks offered the products and the public snapped them up. Apparently both sides believed they were making good deals. Crazy stuff.

Now, when things have gone bust, everyone is looking for someone to blame -- someone other than themselves.

Get over it! You made a bad decision and it bit you in the arse. Banks lost money. Homeowners lost homes. No one forced any of them to offer those "deals" or to take them.

You want someone to blame? Look in the mirror. I am sick to death of people trying to point the finger at others and abdicating personal responsibility. Forced to sign subprime deals? Come on!

* PMI = Private mortgage insurance. This is really insurance for the lender, not you, and is imposed on loans when the borrower has less than a 20% downpayment. Lenders started doing this in the '80s when mortgage rates were high and there were lots of foreclosures.


Danielle said...

I agree. I'm tired of the blame-game, too, but also glad that the FBI beginning to arrest those who deliberately lied all in the interest of making lots of money off someone else's tragedy.

Cindy said...

Yes, certainly those who engaged in illegal lending tactics should be prosecuted. Unfortunately, there are always people who will prey on others. If someone asked the right questions and was lied to, then there definitely is some finger-pointing that should go on. :)

Little Old Liz said...

You are,indeed, right on the money. I have to think that the people caught in this situation 1) Didn't listen to or read the paperwork, and 2) Expected the lender to look out for them.
Time was that if you couldn't make the numbers work, you walked away until your situation changed.
My realtor MIL pushed us in the '80s to buy too much house with an ARM loan and a wish and a prayer. I held my ground and refused. We bought something else, with better terms. It's no palace, but we're still in it and by golly I'm going to be burried in the backyard someday. It's my Patriotic duty! LOL

Tiggywinkle Knits said...

Hey, who said you could use my soapbox???? Whatever happened to that saying about "If it sounds too good to be true?" Don't get me started on personal responsibility; I could go on all night.