Tuesday, March 08, 2011
On my way to work, I listen to Market Place Morning Report on NPR. It’s not as boring as it sounds. At least once a week, Steve Chiotakis has a story about the mortgage mess. If he would call me, I would tell him what happened and how to fix it.
The housing mess was not created by people who bought homes they could afford and ended up in foreclosure due to health problems or job losses. It was caused by people who bought houses they couldn’t afford and by the banks that encouraged such idiotic behavior.
What else happened?
Lots of the same idiots who were buying houses they couldn’t afford purchased them with adjustable rate mortgages. How could anybody (other than the banks) possibly think this was a good idea? Who would buy something with the caveat, “Oh, by the way, that mortgage payment you already can’t afford? It might go up by several hundred dollars at some point.”
Whose fault was it?
The housing mess was caused by the people who bought houses they couldn’t afford. Period. Yes, the banks were making and selling bad loans left and right, but those loans were signed for by the above-mentioned idiots. Yes, realtors showed prospective clients properties they knew the clients couldn’t afford. However, just because they make a pair of pants in your size doesn’t mean you should wear them. The same goes for buying a house. Just because the realtor and bank says the house fits your ass, doesn’t mean you should buy it.
Okay, genius, how do we fix it?
1. Builders must start building moderately priced new housing that normal working people can afford. Every house does not need granite countertops and marble floors.
2. There is a desperate need for decent rental properties in nice areas at reasonable rates. A lot of people jump into a mortgage they can’t afford, because they are appalled that they must pay a bigger monthly rental payment for a two bedroom, one bath apartment than for a monthly house note. How can a person save money for a down payment if they’re spending all of their money on rent?
3. Realtors must stop showing people properties they know the people can’t afford.
4. Banks must stop giving loans to people who they know can’t afford them.
5. Banks should require those humongous down payments people hate. If you can’t save enough money for a decent down payment, you aren’t ready to own a house.
6. People must stop being idiots. Renting until you can afford to buy a house within your budget might be a huge pain in the ass, but I’m guessing being kicked out of your home is a much bigger pain in the ass.