One of the tragedies of the housing bubble was that some people were enticed to buy a home before they were really ready to be homeowners, and others to extend themselves too far. Many of these people are now soured on the wonders of homeownership, and they will not be buyers for an extended period of time. Only the passage of time will salve their wounds. There is nothing anyone can do to convince them to buy right now. I've seen this behavior before in California after previous (and much smaller) bubbles - and I believe we will see it again now.
CR is talking about this as a factor supporting a long drought in home sales, but this hits on one of the more infuriating aspects of this whole mess to me.
One of the fundamental social pressures of this country is that you are supposed to settle down and buy a home. Sure, plenty of people don't buy real estate, but anyone who chooses not to is going to have to have a ready justification every time the subject comes up. Slow, steady pressure. Oh, you're not planning to get a place of your own? Oh.
So you have millions out there who are now in forclosure. They reached for the brass ring everyone said they wanted, the one their broker/banker assured them they could have - and now they are ruined.
Sure, some of them were foolish, even greedy. But you have bankers and brokers who are supposed to be smart enough for both parties. Where it's a case of smart people selling crap loans to fools - I know where my sympathies lie.
Via CJR, I read the Miami Herald's account of mortgage fraud which details some truly shocking acts of fraud (one broker who asked a client to sign a stack of "loan documents" in the back of their car - one of which turned out to be a deed transferring ownership of their house to the broker). The Herald's focus is on how little the state regulators did to stop rampant criminal behavior - and I'm sure the horror stories they list are not the nationwide norm.
But look at the underpinning behavior - a broker in it for their commission, who puffs up the loan so it can be sold. Buyers of that loan who don't bother to check anything on the paperwork. This kind of crap ruined lives. Any normal underwriting of a loan would stop these bad deals. The people who thought they suddenly could afford a house would be told no - but at least their situation wouldn't be made exponentially worse.
The people who believed what they were told bought houses - and then lost them. Before, their finances were merely lacking - now they have a foreclosure on their credit history. Maybe their kids get to own a house, but a good many of them won't get to own anything now.
That's just sick.
1 comment:
oops, forgot to pass the memo.
New American dream = make enough money by 40 to say "f*&k you" to the rest of the world. There are no rules in this 'dream'. Hint: Those with ethics and morals are to be nothing more than your stepping stones, lending their credibility to your cause.
See Mozilo, Angelo.
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