Posted by tecwrg on 5/24/2012 10:27:00 AM (view original):
The seeds of the housing mess was planted during the Clinton Administration, when the regulations were relaxed and banks and mortgage companies were encouraged to make loans to potential home buyers that could go way beyond their means to payback.
Now you can blame the democrats for making that happen. You can blame the republicans for allowing it to happen. But a fair share, if not the majority of the blame, has to go to the American public for taking out loans that went well beyond their means to repay.
Case in point: my wife and I were shopping for our first house in 1996. We both had full-time professional jobs at the time and were doing OK financially. We determined how much we were reasonably willing to pay for a house, how much we would put down, and how much we would mortgage. We determined that anything beyond those amounts would stretch us beyond our means. It would be too high-risk for us, and would frankly be very financially irresponsible of us to buy beyond those numbers.
When we went to the mortgage company that we chose to use to start the process, they came back and told us that we were pre-approved for a loan amount that was around $250k beyond our own numbers.
Had we been stupid and said "woo-hoo" and bought a house beyond what we determined as financially reasonable for us, we would have eventually been foreclosed on, because despite what the banks were telling us, we could not afford it.
Unfortunately, for a lot of people, they took the loans, spent well beyond their means, and lost out in the end.
As far as I'm concerned, many of the folks who got screwed during the mortgage industry collapse had nobody to blame but themselves.