I haven’t read much about the big problem with defaulted mortgages but I read this article in the NYtimes today. With falling values, and rising rates and easy loans in past years people are finding themselves in trouble these days and losing their homes. It is sad. But this is what one guy had to say:
“I worry that people are overexposed to risk,” said Stuart S. Rosenthal, an economics professor at Syracuse University. “We wouldn’t encourage people to buy risky stocks, so why do we encourage low-income families to invest in this risky asset, especially in tight markets?”
So because there are some sad stories now, some specific examples of people in tight spots, all those folks with iffy credit and no down payments should never have been “exposed to risk” in the first place??
Pulease!! The NYTimes needs to start their interview process all over. In this whole 2 page article they never interviewed the poor person who WOW was able to have their dream!!! A little house at 5%. It’s now going to 6.5% and they are going to have to come up with $300 more per month. Yet they’re still happy! They knew the potential problem when they first bought the house. Now they’ve cancelled the cable and they’re getting 2nd and 3rd jobs because they love their house and they are happy they had the opportunity to start with.
There are tons of people out there. That risk was there when lenders were lending the money. And those who received the money also knew there were risks. It’s called investing. If someone with poor credit was allowed to risk someone else’s money for a home and now they are going to lose it, well, that is sad. That doesn’t mean for one second that the choice was bad in the beginning. (Well, it was bad for the lender, but that’s not the sad tale of woe in the NYTimes today.)