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January 25, 2008

Who's To Blame For the Mortgage Mess?

According to an online survey conducted by the Wall Street Journal and the Harris Interactive Personal Finance Poll, the majority of people polled said the government should NOT provide financial assistance to borrowers who can no longer afford to pay their mortgages to keep them out of foreclosure. Here are the findings:

42% felt the government should NOT provide financial help.
25% felt the government should provide financial help

The poll went on to ask who’s responsible for the mortgage quagmire:

52% said it was mortgage lenders and brokers.
21% fingered government regulators
16% faulted home buyers themselves.
11% blamed someone else.

Of note is that nearly half (48%)feel Direct Lenders are most responsible for making sure borrowers are able to pay their mortgages and should be required to modify loan terms for mortgage holders who couldn’t afford their current terms.

“Even though the sub-prime crisis directly affects only a small proportion of Americans, the damage to Americans’ trust of direct mortgage lenders is widespread and may long outlast this crisis. Direct lenders should reach out to their customers and potential customers now to begin to restore their trust,” commented Harris Interactive’s financial services Sr. VP, Peggy Lebenson.

From where I sit I must say I'm not shocked by the survey results. Caveat Emptor seems to be the prevailing sentiment. But that doesn't temper my sadness for those who are loosing their houses due to poor decisions they made regarding financing, decisions in MY opinion which were largely based upon recommendations from a loan professional who they put their trust and faith in to guide them in making good decisions. Shame on them.

Sure, there were some buyers who knew better and who were looking to make a fast buck while the market was heading for the stratosphere, and for them I have no pity, but unfortunately those who didn't know better are now being punished pretty severely.

Let's just hope that a BIG lesson is learned from this and remembered the next time we enter a real estate market with high demand, low inventory, and home lenders whose main criteria of qualification is fogging a mirror...

You can read the entire survey here