Friday, March 30, 2007
This is a quote from the sheriff of Hackensack, New Jersey talking about the current wave of home foreclosures in the subprime market which is now spreading to other levels of market loans:
My problem is that, when we were pre-approved for a loan and we began talking with realtors, we were strongly encouraged to buy a home that cost at least what the dollar amount of our pre-approval offered us. Every time we said "No. We might be able to get a loan for that amount, but we can't pay that much in a monthly mortgage," we got pushed harder. We pushed back.
The Husband and I had carefully studied our current and projected finances in a conservative manner. We decided what monthly payment we could afford and figured in taxes and insurance. We set that amount and looked for houses in that range. We refused to budge. Now, seven years later, we are building good equity and we have a modest home that we are very happy to be buying. We take good care of our home and property and plan to live here for many years, or until we win the lottery and can buy and obscene amount of land in the middle of the mountains in West Texas where we will become eccentric hermits who post rude and threatening no trespassing signs on the borders of our own little citadel. Which means we will probably die here in our west Houston home. And that's OK. This is the American dream. But we didn't let it become an American fantasy. We were approved to buy a home that cost half again what our home cost. We could have done it. But it would not have been a responsible choice.
I am a big believer in personal responsibility. I just don't see how bankers are responsible for people who either chose to be unrealistic in their own financial choices, or who chose to speculate on real estate (I've got a bridge in Arizona to sell you!). That's like saying that if someone chooses to snort cocaine it is their dealer's fault. It was your choice pick up that razor blade and cut up the pretty little white rock, and it was your choice to over extend yourself financially (HGTV says I Can Flip This House!) and disregard the Golden Rule: If it is too good to be true, it probably is.
Don't blame the banker. You're the one who put your John Hancock on that 2 foot tall stack of papers. Over and over and over again.
Sheriff McGuire calls the process "one of the most distasteful parts of my position." He places most of the blame on bankers who allowed questionable lending practices. "This might not have happened if not for these new type of loans."Sorry guys but I have a real problem with this type of sentiment that I am hearing quoted on TV and radio over and over when talking about the folks who are loosing their homes after taking out subprime, ARM, no money down, and other types of non-tradition home loans. It's not that I don't feel for anyone who loses their home. I am blessed to be in debt probably for the rest of my life to a bank for the privilege of "owning" my own home. I am deeply grateful that my husband and I were able to secure a traditional 30 year mortgage at a good interest rate seven years ago. We pay extra money towards the principle often to cut down on that 30 years.
My problem is that, when we were pre-approved for a loan and we began talking with realtors, we were strongly encouraged to buy a home that cost at least what the dollar amount of our pre-approval offered us. Every time we said "No. We might be able to get a loan for that amount, but we can't pay that much in a monthly mortgage," we got pushed harder. We pushed back.
The Husband and I had carefully studied our current and projected finances in a conservative manner. We decided what monthly payment we could afford and figured in taxes and insurance. We set that amount and looked for houses in that range. We refused to budge. Now, seven years later, we are building good equity and we have a modest home that we are very happy to be buying. We take good care of our home and property and plan to live here for many years, or until we win the lottery and can buy and obscene amount of land in the middle of the mountains in West Texas where we will become eccentric hermits who post rude and threatening no trespassing signs on the borders of our own little citadel. Which means we will probably die here in our west Houston home. And that's OK. This is the American dream. But we didn't let it become an American fantasy. We were approved to buy a home that cost half again what our home cost. We could have done it. But it would not have been a responsible choice.
I am a big believer in personal responsibility. I just don't see how bankers are responsible for people who either chose to be unrealistic in their own financial choices, or who chose to speculate on real estate (I've got a bridge in Arizona to sell you!). That's like saying that if someone chooses to snort cocaine it is their dealer's fault. It was your choice pick up that razor blade and cut up the pretty little white rock, and it was your choice to over extend yourself financially (HGTV says I Can Flip This House!) and disregard the Golden Rule: If it is too good to be true, it probably is.
Don't blame the banker. You're the one who put your John Hancock on that 2 foot tall stack of papers. Over and over and over again.
Labels: opinion
# posted by Carol : 9:51 PM
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I have to agree with you, although some of the loan sharks can be quite predatory for those without financial sense. The buck does stop ultimately with a personal responsibility to educate yourself in the matters of basic finance. that being said, what the hell was i thinking going to med school to become a family doc? basic finance would instruct me to do dermatology, but alas the heart won and i won't pay off my mortgage-sized debt for a long long time. maybe these folks' hearts got the best of them, and their dreams of mcmansions were misguided.
Funny you should mention that Aidan because when I think of you I imagine that you are the Yankee version of my wonderful PCP. He is also a young physician and I often wonder what made him choose the indigence of FP. I just know that if your patients are like his patients that we are deeply grateful that you did. Doctors should be able to count sweat equity in paying off their college mortgages!
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