Jobless Sub-prime Mortgage Recovery...Or Something
Don Luskin nails the ridiculous state of sub-prime mortagage teeth-gnashing.
What we have here is the problem that you create when dumb people who have a penchant to borrow more money than they can afford meet a less than ethical salesperson who is incented to make a one-time deal and not based on the best interests of his client. A local paper around here recently chronicled the sub-prime mess with ridiculous "meet a victim" reporting that, inadvertantly, reveals the mixture of greed and stupidity that has landed many homeowners in unfortunate circumstances.
First, there is Ms. Quanda Moore, who borrowed 100% of the price of the home she bought, using an "80-20" loan. Here is Ms. Moore. "They get you into the home. ... There's no equity at all in the home when you buy it," said Quanda Moore, 36, who paused several times to compose herself. "I don't want anyone to go into the situation I've gone into." As if you are supposed to find some equity in box in the basement when you move in. Hey lady, you gotta put equity in, that is why "saving up to buy a home" is such an oft repeated phrase. If we could all borrow 100% of the value of a home, no one would have to save up.
Unfortunately, the stars all aligned and armies of wrongly incented mortgage brokers met with an army of Quanda Moores who for some reason or another embarked on the significant task of buying a home without any preparation or understanding of what is involved.
We survived the sub-prime credit card mess a few years back - when the same types of people bought flat screen TVs that they couldn't afford and there were companies greedy or dumb enough to lend to them - we'll survive the "sub-prime mortgage crisis". This oblique Bush bashing meme will go down in history right next to "jobless recovery."
What we have here is the problem that you create when dumb people who have a penchant to borrow more money than they can afford meet a less than ethical salesperson who is incented to make a one-time deal and not based on the best interests of his client. A local paper around here recently chronicled the sub-prime mess with ridiculous "meet a victim" reporting that, inadvertantly, reveals the mixture of greed and stupidity that has landed many homeowners in unfortunate circumstances.
First, there is Ms. Quanda Moore, who borrowed 100% of the price of the home she bought, using an "80-20" loan. Here is Ms. Moore. "They get you into the home. ... There's no equity at all in the home when you buy it," said Quanda Moore, 36, who paused several times to compose herself. "I don't want anyone to go into the situation I've gone into." As if you are supposed to find some equity in box in the basement when you move in. Hey lady, you gotta put equity in, that is why "saving up to buy a home" is such an oft repeated phrase. If we could all borrow 100% of the value of a home, no one would have to save up.
Unfortunately, the stars all aligned and armies of wrongly incented mortgage brokers met with an army of Quanda Moores who for some reason or another embarked on the significant task of buying a home without any preparation or understanding of what is involved.
We survived the sub-prime credit card mess a few years back - when the same types of people bought flat screen TVs that they couldn't afford and there were companies greedy or dumb enough to lend to them - we'll survive the "sub-prime mortgage crisis". This oblique Bush bashing meme will go down in history right next to "jobless recovery."
posted by Donny Baseball at 2:29 PM
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