Spring Break
Buyers shouldn't be blamed for mortgage blunders
DJ Funkhouser | Daily Kent Stater
Issue date: 3/13/09 Section: Opinion
Attending college and living purely among college kids, I don't feel the world's economic slump. I don't see anyone struggling with it. College has shielded me from the effects of our unfortunate economy, as if I'm someone else from somewhere else.
It's dehumanizing. All my life I've been able to see the problems that most Americans face because, to a certain degree, they've affected me as well. It's mystifying, then, to see how apathetic I've become to the circumstances of others.
I used to live in Loudoun County, Va. Growing up there, I saw a rural area outside of Washington transform itself into the fastest-growing county in the United States. Houses couldn't be built fast enough to keep up with demand.
My house's price doubled in just six years. Two of my adjacent neighbors were housing speculators whose sole intention for moving into the area was to flip the house at 25 percent profit or more.
This wasn't uncommon; in 2004, the National Association of Realtors calculated that 23 percent of homes were purchased for investment.
Given the market, it seemed like an easy way to make a huge return: sit on a house and wait for it to inevitably appreciate. And it seemed safe.
My high school business teachers always said that housing is the only thing that always appreciates.
I don't think I was the only one privy to their "insight." Even Alan Greenspan stated in 2005 that a housing bubble is "quite unlikely."
I moved out before the bubble burst, but unfortunately, one of my neighbors did not.
Despite the media's rhetoric of speculators' complete irresponsibility or greed, the ones I knew were anything but these descriptions.
They were engineers and teachers listening to the advice of their financial planners and realtors.
The profits they planned to make were going to pay for their kids' college tuition.
After taking out loan after loan and struggling to pay for college yourself, can you not sympathize?
There's been a lot of talk about the mortgage bailout plan and how it reinforces borrowers' bad behavior.
I want to make it clear that I'm not supporting the mortgage bailout plan, especially while it covers all mortgages under the oddly high ceiling of $729,000. But it does upset me that so much blame is put solely on the borrowers.
The mortgage bailout plan would certainly subsidize bad behavior, but that bad behavior was not limited to the borrowers.
In fact, the bad behavior expanded far beyond them: lenders and politicians weakening mortgage-loan underwriting standards, lenders giving out NINA loans, rankers who gave AAA ratings to some poor CDOs, real estate agents encouraging buyers to overbid, housing companies building too many houses too quickly and the media failing to report that the housing boom was unsustainable.
I'm not saying we should subsidize my neighbor's mortgage, but we shouldn't stigmatize him for making a decision with risks that professionals understated. Although he must take some of the blame, he shouldn't take it all.
We need to remind ourselves of this - particularly when we can't see his position.
This story was originally published March 11 by Indiana University's Indiana Daily Student. Content was made available by Uwire.com.
It's dehumanizing. All my life I've been able to see the problems that most Americans face because, to a certain degree, they've affected me as well. It's mystifying, then, to see how apathetic I've become to the circumstances of others.
I used to live in Loudoun County, Va. Growing up there, I saw a rural area outside of Washington transform itself into the fastest-growing county in the United States. Houses couldn't be built fast enough to keep up with demand.
My house's price doubled in just six years. Two of my adjacent neighbors were housing speculators whose sole intention for moving into the area was to flip the house at 25 percent profit or more.
This wasn't uncommon; in 2004, the National Association of Realtors calculated that 23 percent of homes were purchased for investment.
Given the market, it seemed like an easy way to make a huge return: sit on a house and wait for it to inevitably appreciate. And it seemed safe.
My high school business teachers always said that housing is the only thing that always appreciates.
I don't think I was the only one privy to their "insight." Even Alan Greenspan stated in 2005 that a housing bubble is "quite unlikely."
I moved out before the bubble burst, but unfortunately, one of my neighbors did not.
Despite the media's rhetoric of speculators' complete irresponsibility or greed, the ones I knew were anything but these descriptions.
They were engineers and teachers listening to the advice of their financial planners and realtors.
The profits they planned to make were going to pay for their kids' college tuition.
After taking out loan after loan and struggling to pay for college yourself, can you not sympathize?
There's been a lot of talk about the mortgage bailout plan and how it reinforces borrowers' bad behavior.
I want to make it clear that I'm not supporting the mortgage bailout plan, especially while it covers all mortgages under the oddly high ceiling of $729,000. But it does upset me that so much blame is put solely on the borrowers.
The mortgage bailout plan would certainly subsidize bad behavior, but that bad behavior was not limited to the borrowers.
In fact, the bad behavior expanded far beyond them: lenders and politicians weakening mortgage-loan underwriting standards, lenders giving out NINA loans, rankers who gave AAA ratings to some poor CDOs, real estate agents encouraging buyers to overbid, housing companies building too many houses too quickly and the media failing to report that the housing boom was unsustainable.
I'm not saying we should subsidize my neighbor's mortgage, but we shouldn't stigmatize him for making a decision with risks that professionals understated. Although he must take some of the blame, he shouldn't take it all.
We need to remind ourselves of this - particularly when we can't see his position.
This story was originally published March 11 by Indiana University's Indiana Daily Student. Content was made available by Uwire.com.
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