I am tired of hearing people call this “predatory lending.” I hope there are no bailouts or help for anyone losing their home. The lender is there to make the sale. It is your job to decide if it is appropriate for your situation. This is just like anything else in a free country. You are free to choose and it is your responsibility to decide if food, cars, and anything else that you purchase is appropriate for you.

Everyone needs to start taking responsibility for themselves. Otherwise nothing will change and history will repeat itself.

Some people are raised in an environment where things that are common sense things you need to know to you or I aren’t exactly a priority due to living circumstances. So they fight and scratch their way out of the situation and the first thing they want to do is live the American dream and buy a home. You’re saying it’s a good thing to stick it to them one more time and teach them a lesson by robbing them blind with a predatory loan?

This isn’t a darwinian experiment dude. It’s people’s lives, their homes, their families. If you were forced to meet face to face with every family that lost everything behind one of these loans, look them in the eye and hear their story what would you do? Would you pat them on the back and ask them if their glad they learned this lesson?

check out the housing bubble video on:

http://economicdespair.blogspot.com

It is a very simple but incredibly moving account of what this subprime thing was all about.

Asset bubbles are driven by people, and people are always the victims.

We have too much of an entitlement society and we need more of a personal responsibility society.

I think the problem here is that we expect someone with a total household income of $40,000 a year to have some understanding of compound interest or economic factors that affect the payment they are undertaking.

At the same time the mortgage industry has incentivized brokers to sell riskier loans. A broker can make 1 point on a 30 year fixed, or they can make 1.25 points on an exotic mortgage. The difference is that the exotic mortgage also allows the loan amount that compensation is figured from to be inflated because borrowers are fixated on payment.

Then when you allow the broker to hide his fee from the borrower, you are inviting people to ignore the best interest of the borrower.

Essentially the same thing happens in sub-prime auto lending. A customer is focused on payment and not on other variables, which in essence allows a finance manager at a dealership to rob them blind.

Could say the same about credit cards, or payday loans….The economy is addicted to easy credit. Which is why when that goes away, the after effects of this 2 decades long party are going to be pretty severe.

Expecting the lower and middle classes to learn about and understand finance is like expecting your dog to not eat the steaks you set on the table while you run to the store for milk. It is just not going to happen.