As part of our ongoing reportage on the problems many Americans are having with subprime and adjustable-rate mortgages, msnbc.com ran the story about a San Diego woman who lost her home in part because of the type of mortgage she took out.
We asked readers to share their thoughts on who should shoulder the blame for this and tens of thousands of similar events occurring throughout the country. More than a thousand readers responded. Here are excerpts from their comments.
Shared blame
While I do not have a personal foreclosure experience, I believe that the responsibility lies primarily with the mortgage industry. The mortgage industry in my opinion wasn't open and upfront with the "interest only" and subprime products that were offered. On the other side of the equation, the buyers didn't do the "due diligence" necessary to get answers to critical questions. A purchase of real estate is a business transaction, and a lot of people don't look at it in that way. Also, buyers are not getting legal representation in the most critical of decisions in their lives. The third culprits are the real estate brokers etc., who push settlement companies. In reality, all a settlement company is a "transfer agent" for the buyer and seller to facilitate the transfer of the property title and necessary collection and disbursement of funds to close the real estate transaction. Hence, no one is there looking out for the buyer.
— Mark, Pennsylvania
Painting a picture
In some instances the home buyer was so anxious to get into a home they accepted any mortgage product given to them without reading the documents or fully understanding the terms of the loan. On the other hand, some lenders were (so) greedy that they used whatever tactics necessary to sell the potential buyer into taking the mortgage loan by painting a picture of continually rising home prices. I see this all the time as an HUD-certified housing counselor in Southern California.
— Max, California
Misplaced trust
If people were all real estate experts, there wouldn't be such a thing as real estate agents! You expect real estate professionals to know things you don't and to give you real advice and truthful information. People who know the ropes and are in a position of power to place the "average" working-class person in a huge investment like a home should be held accountable for misleading people with fast talk to believe that what is an impossible situation will work itself out in a couple of years if they just take the plunge. You trust plumbers, electricians and doctors to give you the right advice and help since you don't know what that is. A real estate professional should have the same expectations placed on them or they shouldn't have a license.
— Dana, Minnesota
Blame buyers
I think the buyers are responsible for the situations they got themselves into. If you really were not sure of something or hadn't been through the process before, you should have been asking more people you know, such as family. I am 24 and am now on my second home that I own with my husband. Never in a million years would I have ever signed for an adjustable-rate mortgage or an interest-only loan. Also, you should never be tied down by your mortgage. I think it is all just common sense.
— Jennifer, Oregon
'Got to have it now'
There's only one answer: Rampant consumer greed. It's yet another manifestation of the "got to have it now" generation, whose capacity for due diligence, moderation and affordability have been skewed by lousy parenting, crass egotism and unrelenting selfishness. They got exactly what they deserved.
— Bob, North Carolina
Be like Mike
The root of the problem is in the "keeping up with the Joneses" mentality that people succumb to. This desire to be like Mike, and have all the fixings and trimmings of the next guy is simply materialism gone mad. In the case of the housing boom (and now bust), lost in this rush to be like Mike is that you may not be able to afford what Mike affords. When we lose track of our own merits and subjugate our sense of happiness to an object, we lose our ability to be rational. We get into a near panic state that creates a sense of urgency and "must have" craving that leads to an easy sell, if you will, by those that are the facilitators of the person's desire. With the mortgage brokers, and real estate agents and friends who just bought a "beautiful" home, being the facilitators in this case. While I feel for the plight of those that tried to be like Mike, and recognizing that they were not of sound mind in doing this, it is not such a bad thing in that one can be confident that the next time they feel the pang of temptation, they may just say "hey, Mike is Mike, and I'm me, and that's just fine".
— Walt, Idaho
70 percent solution
I would say about 70 percent the mortgage companies, they knew what was happening. Thirty percent the buyers — if something is too good to be true, buyer beware.
— Matt, Northern California
Like Katrina
It is a combination of both, and a few other factors. It will work out eventually, the federal government will help out the failing and corrupt companies that supplied these loans, but you can bet your bottom dollar (which is only what a lot of people have at this point) the individual homeowner will suffer for years and years to follow. Another “shame on you” to this current government. This is going to be exactly like Hurricane Katrina without the flooding … big government doing nothing.
— Scott, Florida
Investor, not homeowner
I have absolutely no sympathy for someone who justifies leaving the renting scene by purchasing a home under interest-only terms. As soon as she did this she became an investor and not a homeowner. No one can predict any market whatsoever, and in this case her investment came out to be a bust. How could you justify yourself ever owning a particular home when the interest-only payments consist of over 50 percent of your income? I have just recently purchased my first home and it was not my "dream home," but I live in reality and can understand that I can only buy what I have the money to afford.
—Justin, Missouri
They got taken
I own my house, bought and paid for. But I know a number of people who were naive and got taken by lenders. Without a doubt, I feel the banks and lenders are at fault. It is their job to help you determine what you can afford — that's what their education was geared to. People trust them to tell them how it all works, not to take advantage of their ignorance. I think the lenders should be sued for malpractice. They willfully showed negligence in giving these loans, all for the almighty dollar and on the backs of the working poor and middle class. Despicable!
— Maryann, Ohio
Not black and white
I don't think there's a black and white answer here; in some cases it was greedy lenders (who lent to less-than-qualified borrowers knowing the loan would be sold off) and in others it would be the borrowers fault for not buying within their means. In the case mentioned in this article I think there's a bit of both going on. I'd like to see some serious audits done where borrowers honestly said what their income was and lenders loaned away.
— Virginia, California
For shame
I had three children who purchased new homes in the past six years. All three borrowed 103 percent of the price of the home because they had no down payment. So far, one of them has lost their home. In all three occasions, the monthly payment quoted rose 40 percent in the first three years of the mortgage. I should have stood my ground when they ask me for my opinion on the “deal” in the beginning. You need to go no farther back than our educational system and us parents for not educating our youth on financial dealings. The housing industry painted a rosy picture and for some unknown reason the mortgage companies went along with the story. Buyers were convinced that they could own cheaper than they could rent when the housing and the mortgage companies knew this comparison was only short term. Monthly payments were quoted on low interest-rate figures and no property taxes figured in for the first 12-18 months. Then interest rates rose the second & third year; suddenly that $700 a month payment had ballooned to $1,200. Shame on us parents for failing our children by not defining that rosy picture for what it really was. Shame on greedy mortgage institutions and housing industries for taking advantage of our youth. They are getting back exactly want they deserve; the overvalued piece of property that they originally sold in the first place.
— Don, Indiana
The final say
The housing industry for sure! The buyers might be stupid for doing it, but the banks had the final say and knew these people were hanging by a thread and couldn't afford it.
— Kathleen, Pennsylvania
Live within your means
The U.S. government is not responsible to finance the lifestyle of people who choose to live outside their means. I elected to buy my first condo on my own at 30-year fixed rate and chose something lower priced I could afford. People are selfish and want to have the exact standard of living their parents have worked their whole lives to achieve. No sympathy from me. I don't expect to live in a 600 square foot condo forever. But I know that I own it and I can afford to live in it and can sell it eventually if I so choose.
— Taline, Virginia
Getting rich
Mortgage lenders, Realtors, and the rest of the housing industry were greedy and continued to pour fuel on the fire hoping they could get rich and jump out before it bit them. They are definitely guilty and we need to take a hard look at their actions over the past six to eight years. The industry needs to be overhauled and some should be prosecuted. Buyers, however, are just as guilty. When you can't afford to buy a house in 2000 because you don't make enough money, what makes you think you can purchase a house in 2004 when the price of housing was more than 100 percent higher (as in San Diego)? Buyers will claim they were manipulated, but we make grown up decisions in life, and at times, greed overshadows sound decision making.
— Topher, California