Trampled By Washington!

My local newspaper ran an article titled “Trampled by foreclosure” on Sunday, February 15, 2009. It provided a synopsis of the plight of one unfortunate home owner and his family who lost 2 homes in the last 2-years through a series of events that we all hope never happens to us. In the article he states, “Half of it is my fault and half of it is because the government is a sellout.” “These banks, these companies, all these big shots, they don’t care about me or the working people. All they want is money, and they don’t care who they step on.”

In many ways he is right. Financial institutions loan money to make money for their institutions and stake holders. Each individual borrower is a number, a transaction. In a perfect world a vast majority of borrowers pay their loans back over time. The institutions make money be either holding the loan or bundling and selling them. Unfortunately, when these bundled loan packages contain a large level of subprime and high risk loans the chance of default is dramatically increased. And guess what, your note holder does not care why you can’t pay! They want their money or the assets that secures the loan.

Despite the public perception, a large majority of individual loan officers and lenders conducted business properly and helped qualified borrowers get into homes. But as we all know there are always some folks out there who conduct business differently and made a lot of quick money in the process. With the availability of no-interest loan packages, teaser interest rates, and no doc loans, you could get even the most unqualified person into a home. Some borrowers were naive but others knew they were taking a risk that they could refinance later when the clock struck midnight on their “let’s get you in the house rate.” Even the individual in the article stated; “I think it was one of those things where they qualify you even though you don’t qualify. To be honest with you, I didn’t understand it that well,” Does not understanding absolve him of responsibility? No. He is paying the ultimate price by losing both of his homes and having to start over. Unfortunately, we will never know if the individual that sold him the loan conducted business properly or not. We would all like to assume he did.

The individual in the story is like many across the country who have suffered a great deal over the last few years. While they own some of the responsibility, much of it must be placed on the lending practices written into law by our own government and executed flawlessly by our financial systems and institutions. The housing and financial collapse that has beset our nation and the world is the biggest economic correction many of us will ever witness. If you are fortunate enough to escape the loss of your home or employment as a result of this mess you still will not remain unscathed. The elected officials in Washington who enabled this fiasco, will make sure you and many generations after you pay for this time and time again under the illusion that they are fixing the problem.

If only we could get all of our elected officials in Washington to stand in front of a mirror at the same time they could see the problem!