Why should I feel bad that you gambled on a mortgage and lost?
I can deal with someone who was cheated by their mortgage broker, banker, or whomever. Someone who was literally lied to about how much their mortgage was going to cost them now, in two years, in five years, in ten years. But what I can’t deal with are all of these heart-tugging news broadcast and Joe and Suzie who simply wanted the American dream for their children, so they risked their entire family’s livelihood on a gamble that they could sell a house they couldn’t afford before the “real” mortgage rate kicked in. Sorry, Charlie, but those people knew what they were doing. They gambled. They lost. I had the same choice they did, and I said “no,” things were simply too expensive. So now they get a bail out and I get nothing because they wanted money for nothing? I don’t think so. Again, if they were affirmatively lied to, then they deserve redress. But if they were idiots willing to risk it all for some easy money, then we do them no favors by bailing them out.
- John Aravosis
It’s been all over the news lately…and perhaps you’ve even noticed it in your own neighborhood. Foreclosures are up, and families are being tossed out on the street. Why, just yesterday, CNN cameras followed Elmer and Mabel Fuchwad of Scumbucket, AR, as they relay the story of their miserable plight.
Wait a minute, though. Before we get all weepy and red in the face with canned outrage, we might want to look what’s actually happening here. Yes, a family being forced into foreclosure is never a good thing. I used to work for a mortgage lender, and I understand how the game’s played. The reality is that no one wins in a foreclosure situation. Lenders lose, the homeowners lose, and the community loses as well. What’s happening now is not all about evil, predatory lenders wreaking their revenge on unsuspecting lenders. Yes, there is some of that going on, but a lot of this story- perhaps the largest part of it- is about people who made poor financial decisions for all the wrong reasons. Now that their poor decisions are coming back to bite them, they’re all too often whining to the media about their victimhood.
Buying a home is in many respect a gamble. A buyer is betting that they can afford the payments, and will continue to be able to do so as time goes by. It’s supposed to be a carefully choreographed dance pairing dreams and reality along with hope for the future. After all, it IS the American Dream, no?
So what happens when a buyer’s desires and dreams exceed their common sense and their ability to pay? Are we supposed to go all soft and weepy if someone makes a decision to buy a house that in truth they cannot afford? When they run into the predictable difficulties, do they really have anyone to blame but themselves?
When last I checked, lenders generally don’t hold a gun to the head of a prospective home buyer and force them to sign. A buyer must make a conscious decision, weigh the options and the risks, and then sign on the dotted line if they decide to proceed. The key here is that it’s an elective decision, one an individual generally makes of their own free will. Sometimes decisions don’t pan out; are we then to be expected to bail out a family who bought a house that, if they’d been honest with themselves, they should have been able to realize they couldn’t afford over the long term?
Decisions have consequences…and bad decisions sometimes have bad consequences. If you buy stuff you can’t afford, you need to realize that it may catch up with you- maybe not tomorrow, and perhaps not even any time soon. If it does happen, though, it’s going to be because you made a conscious to not live within your means.
If you don’t read a mortgage contract, if you sign it in spite of not fully understanding (or in willful igorance of) the terms, you can’t claim to be surprised when your home ends up in foreclosure. You can admit to your mistake, and hopefully learn from it. What you can’t do, and certainly cannot expect, is to have government bail you out.
There’s a very simple rule that She Who Endures My Myriad Eccentricities and I have learned to live: if you can’t afford it, don’t buy. That may sounds overly simplistic, but in today’s want-it-now-have-it-now society, it’s a lesson that more Americans could probably stand to learn.
