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AFTER
ALL IS SAID AND DONE:
THE BANKERS CREATED THE FORECLOSURE CRISIS!
By
Jan Bergemann
Published
August 31, 2012
No
matter how you twist and turn the arguments – in the end
it’s always the fault of the bankers that caused the real
estate market to crash -- caused by the countless foreclosures.
Yes,
you can argue that the bankers didn’t stand there with a gun
forcing the potential buyer to sign the contract on the
house/condo. But short of that?
Admittedly,
potential homebuyers should have been old enough to know what
they can – and can not – afford. But the irresponsible
lending policies of banks and mortgage companies made it just
too tempting for many owners to buy a house/condo, much more
expensive than their bank account could afford.
And
if we are honest, we have to admit that many homebuyers just
don’t have the education to understand what they really
signed. Some of these mortgage contracts were so convoluted that
even highly educated citizens had a serious problem to find the
little paragraphs -- in small print – that caused the mortgage
payments to go through the roof after initially low monthly
payments. Bankers, who were supposedly the professionals in this
“game,” fell over themselves to hand out mortgages on a
silver platter, often ignoring the warning signs of low credit
scores and low income of the applicants.
I
will never understand how a banker in his/her right mind can
finance 100% of the purchase prize – plus all the closing
costs and the first year of property tax and property insurance.
These kinds of loans had to go bust.
Remember
all the advertising that promised to finance a home – no
questions asked – for $1,000 down? We have seen whole
communities being foreclosed on, after the developer made a
fortune and the bank was taken over by the FDIC. Who do you
blame for this nonsense? The family that lived in a nice home
for more than a year without paying a dime after the initial
$1,000 down payment, or the banker who handed out these loans?
Remember the condo conversions, where greedy developers turned
old apartment buildings into spiffy-looking condos – with just
the help of a paint job -- and then showed up at the doors of
the families renting these apartments, threatening them with
eviction if they wouldn’t buy the condo? Many quickly agreed,
because the willing mortgage lender was just
two steps behind the developer, claiming that the mortgage
payments were lower than the rent? Many of these buyers didn’t
even fully understand what they really signed.
They would have signed everything after being promised
that they could stay in their homes!
Let’s
make no mistake: The developers were only able to pull these
scams with the help of a greedy banker willing to give these
loans despite all the obvious warning flags.
Yes,
one can make the point that these families shouldn’t have
fallen into the traps that often ate their whole life savings.
But,
without the bankers willing to sign these high-risk loans, these
“purchases” would have never been possible. Greed got the
better of these bankers, who in the end were rewarded for their
greed and/or incompetence with bail-out money -- courtesy of the
U.S.
taxpayers!
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