Howard Kurtz on mortgage loans

ST reader Leslie forwarded me this piece written by Howard Kurtz on the “sob stories” we hear about people who’ve bought a home they can’t afford thanks to a dicey loan, and how the media portrays them as victims:

Memo to the media: Everyone who is defaulting on a home mortgage is not necessarily a victim.

I feel sorry for anyone in that situation. Losing a home is an awful thing. Some were undoubtedly pressured into buying by unscrupulous lenders. Too many greedy players on Wall Street got away with making shaky loans for too long. They sliced and diced mortgage debt into increasingly exotic paper and lost sight of the risks involved, figuring the Fed would bail them out if things got out of hand.

But let’s face it: Most of the people who took out home mortgages for no money down knew that this was a roll of the dice. Who gets to buy a house without a down payment? And most of those who took out adjustable-rate mortgages knew that their rate would balloon in a couple of years, and could do so at a level that would be hard to afford. They took the risk anyway. No one forced these folks to take on big mortgages they could barely handle.

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But when the mortgage meltdown pieces are written or broadcast, the lead is inevitably someone who is about to lose his or her house, with not so much as a nod toward the notion that these people might have overreached or bears any responsibility at all for their financial plight.

Perhaps inevitably, Hillary Clinton has now proposed a $1-billion fund to help struggling families catch up on their mortgage payments, and John Edwards also wants to give money to those who can’t make their payments. So the taxpayers should bail out folks who took out these loans with their eyes wide open?

Again, I’m not unsympathetic. And there’s plenty of blame to go around. But we shouldn’t let homebuyers completely off the hook just because it makes for a better narrative.

Agreed. Life is all about choices, and as Kurtz said, most of the people going for a dicey loan know they’re taking a risk – they also know what they can afford and what they can’t, but try anyway.

Everybody wants a nice home and a nice car, but some people think that means buying the fanciest house on the block or the fastest car on the lot. You don’t have to get the best of both to have something nice. Right now, I have a car that is paid for, and a sweet little townhome that is not killing me (yet! LOL) in mortgage payments every month, and I love them both. Neither one of them are the cream of the crop, top of the line, but they’re cute, sensible, and what I could afford comfortably and that was what was most important to me. Having a house the size of the Biltmore Estate is no fun if you can’t afford anything other than the mortgage payment on it.

When I set out to buy my first house two years ago, I had an idea in mind of what I could afford, but in a rush of excitement and heat of the moment passion, I nearly got in over my head. The first townhome I attempted to buy I backed out of when reality hit after I had gone over all the figures once I got home, and all the while I was doing this the guy working on my loan was calling me and emailing me trying to figure out ways he’d be able to have approved for me for a loan I couldn’t really afford. The second time around was much better. I found a place that was a perfect fit for me both financially and personally. Had I gone with that first loan though, I would have been snowed under, and I would have had no one to blame but myself. It doesn’t take a rocket scientist to figure up your bills and add to them what your mortgage payment would be, in order to see what you can afford.

But in today’s “victimhood society” it’s all about putting responsiblity on everyone else. That’s not to say that the lender doesn’t bear some responsibility, but in the end, life is about individual choices and we shouldn’t expect to be cushioned by the gov’t from every bad choice we make. It’s called “personal responsiblity” (dirty words to big government Democrats like Hillary Clinton and John Edwards). To be sure, no plan for the future is foolproof, but you’re a lot better off when you don’t take unnecessary risks with the financial decisions you make, especially when you’re talking about buying a house or a car. Those are big investments, and you certainly don’t want to sign on the dotted line for either of them unless you’ve done your homework to determine whether or not it’s going to break the bank for you to do so.