ARE THE BANKS SOLELY RESPONSIBLE FOR THIS MESS?

By Eric Glazer, Esq. 

Published August 27, 2012

Week after week, month after month and now year after year, community associations blame the banks for their financial woes.  There's no question that banks need to foreclose quicker, pay more to associations when they eventually take back title to a unit, and properly upkeep the property during and after a foreclosure.  This goes without saying.  However, when we read the papers and watch the news, I think we all need to admit that the focus of all that is wrong with the collapse of our real estate market seems solely to fall on the banking industry.  I'm thinking though that there might be another entity to blame though.  Dare I say it.  OURSELVES.

The media simply makes it seem sometimes that the banks had guns to everyone heads forcing them to borrow money to buy a house.  Correct me if I'm wrong, but the banks didn't force anyone to borrow anything.  Everyone wanted to own a home and everyone who already owned a home wanted to own a bigger home.  People who owned big homes now wanted to own two big homes.  Nobody really cared if they could actually afford to make the purchase because obviously we were all going to get rich together.  As we all knew, the real estate market only goes up and never goes down.  Right?

Sure, the lending practices of the banks should have been stricter.  Of course not everyone should have been able to qualify to buy a half million dollar home.  But are the borrowers themselves at least partially responsible for their own demise?  This is not the same as a drug addict being offered drugs and simply being unable to resist.  Or was it?  Borrowers had the ability to purchase more affordable homes, but consciously and repeatedly rejected that notion in favor of over extending themselves with a devil may care attitude.  Millions even thought it was a great idea to have interest only loans, or loans with variable rates, never worrying for a minute that the rate may go up while the value of the home goes down.

Think about this.  About 70% of all homes in the country have a mortgage on them.  Apparently we like banks.  We need banks.  Without them, there really is no real estate market at all.  During this foreclosure crisis their behavior has been deplorable in many instances including but not limited to the robo-signing scandal and their failure to quickly foreclose and/or care for foreclosed properties.  Notwithstanding the bank's misgivings, I still think we are responsible for our own behavior, and even our own greed.  And for those of you who may share in this belief ………you would probably also agree that the reason why your community may be suffering financially is not all the fault of the banking industry, but rather the fault of the neighbor who used to live in the unit next door before they were foreclosed on for failing to pay the mortgage they never were able to afford in the first place.