Trickery or Just Plain Stupidity?

With the United States in a state of emergency where home foreclosures are concerned, who exactly is to blame? Is it the crooked Mortgage Broker that convinced a husband and wife that they could purchase a $275,000 home on their combined income of $55,000 a year? Is it the real estate agent that kept the couple looking at the more expensive houses to get the 4% minimum commission? Was it the loan officer that fudged the numbers to allow these risky bowers with a less than desirable credit score to get into a three year arm that they were virtually guaranteed not to afford once the rates increased? Is it the government for not having a tighter reign on an industry that, in hindsight, has the ability to make or break our economy?

Everyone has an opinion so I won’t shy away from delivering mine and to tell you the truth….I don’t blame any of the entities above. I blame the buyers. Pure and simple, it’s the buyers who, instead of weeping tears of false promises made by lenders and the like, should be ashamed that they are so stupid. Oh sure, some might say that I am out of line on this one because the “stupidity” factor is illogical considering the shear volume of borrowers in the same situation however when does one ask themselves, “this sounds too good to be true…is it too good to be true?” Of course it is stupid! No one who gets a $275,000 loan without a penny down and no principal payment for three years can expect not to have to pay the piper eventually. You read the small print on the contract right? I mean, you looked at the rate table and not just saw the steady increases to make up for the lost down payment, the up side down equity and the interest only payments but you comprehended it, right? So when you did figure on the doubling house payment, you just thought you’d magically be in a job market that allowed for an annual increase of at least 15% annually right? I mean, you just knew that you’d be making so much more money that you’d have no worries. Yeah, not so much (as my college girlfriends used to say).

It is absolutely ridiculous to think that not only does the US government have to shell out trillions of dollars to deadbeats who refuse to get a real job taking advantage of our welfare system and provide a steady flow of cash backing for credit card companies that allow stupid people to have ridiculously high limits on cards they couldn’t pay back in their lifetime if they lived a thousand years….but now, the government has to bail out the mortgage providers such as Fannie Mae and Freddie Mac so that some sort of reconciliation can be made to shareholders. And who are those shareholders? Certainly not the tens of thousands that defaulted on loans their asses couldn’t cash if the brown eye was made of gold and seeping diamond shit.

I am certainly not an expert in the sub-prime mortgage crisis other than anything I’ve read or seen in the news, however I can tell you a couple of things about being a consumer of credit and a new homeowner; When you charge up a credit card with frivolous purchases such as televisions and clothes or when you rack up your cards with “necessities” such as appliances and car repair, YOU and ONLY YOU are responsible to pay that back. When you purchase a home for more than you can afford, YOU and ONLY YOU are responsible to pay what needs to be paid in order to remain in the home. READ THE SMALL PRINT. It’s not there to give you a headache or to “trick” you into oblivion. It’s there to provide important, if not absolutely vital information with regard to your payments and what you are getting for signing on the dotted line. And just because you don't read it, or you skim it with an utter uncertaintly, doesn't mean the credit card company or loaning bank will forgive your debts. This is not a game. You can't just say, "oh I didn't know" and expect to be relieved of your duties.

I have credit cards and with them, I've accumulated a mother load of debt. And at times, I have racked up those credit cards beyond my means of paying them back. I have NO ONE to blame but MYSELF during those times. Although I hate the credit card companies and all they represent, they did not force me to purchase a round of drinks every night for two months at a seedy mexican restaurant. They did not force me to purchase my laptop computer on plastic because I didn’t have enough sense to start a simple savings account and pay cash when I could afford it. They did not force me to buy clothes from the Gap on plastic when I could have paid cash for something cheaper at Walmart. Sure, who really wants to shop at Walmart for clothes if they really don’t have to? Well, not many people but you know what? It sure beats having to wear the same “Gap” outfits for four years running because you’ve maxed out your credit cards and have no money to buy any new clothes, Walmart or not.

Now, yes, I am exaggerating a bit. I do not have any clothes that are more than two years old (other than my favorite Borne shoes from 2000) and I don’t really shop at Walmart for clothes. (Although their prices can’t be beat on household cleaners). But my point is clear. I have no one to blame for the $350 a month payment to the credit consolidation company for the last three years and for the next two years than me. I am reaping what I sewed years ago and there is no one else to blame but me.

The great thing about this whole crisis though is that there is light at the end of the tunnel. It’s now a buyer’s market and even I could afford a home. Yes, I’m a homeowner and a smart one at that. I didn’t get talked into these silly ARM loans so that I could live in a bigger home now. No, I took my time, played the game conservatively and most importantly, educated myself. I bought a home I could afford. We’re locked in at a mortgage we can afford (with or without a two-income household) for 30 years…with no surprise increases or unprecedented interest rate hikes. We put money down and didn’t try to shift the inevitable to get something now that we will only be able to afford later. And we’ve set aside our 3 month contingency account for the rainy days. All that and we’re in a comfortable enough position that we’ll be able to sell in three years and make money on the deal. No, it’s no palace and it’s hardly big enough for us to even grow into, but you know what? It’s ours and we love it. And you know what else? I’m taking responsibility for the debts I did procure and I’m not ashamed of it. Sure, I had a lot to learn but that is my own responsibility. If the time should ever arise that we are unable to afford our 3 bedroom love shack, I’m not going to blame our mortgage broker for getting us into a 30-year fixed loan or the real estate agent for steering us to the already flipped digs of the suburbs. No, I’m going to remember that I am an adult and that I read the fine print and that I understand exactly what I am doing with my money.

So, in a nutshell, there’s not too much that can be done regarding the impending mortgage crisis because the money has been leant, the houses have been foreclosed and the banks are already in trouble but hopefully those people now renting instead of enjoying the many accolades of being a homeowner will remember the next time out... nothing comes that easily or that cheaply. Read the fine print and for gosh sakes, don’t over estimate what you can afford. Learn to live on what you make in cash and not what you wish you could afford. It’s worth your own well-being and worth not pushing your kids from a home they’ve come to know as their own into a rental that was just vacated by two 20 year olds and four five-month-old kegs.