I read a letter to the editor in the March 2009 issue of Consumer Reports (a great magazine, BTW) discussing a previous article in the magazine about the mortgage crisis. I've struggled for the last few months trying to determine a clever way to express what I see as a large part of the problem. The letter writer, John Leonard of Seattle, expressed it nicely.
He said that the most important reform that was needed because of the mortgage crisis was to "Reform the consumer." We should start with these steps:
1. "Thou shalt not covet more house than thou canst afford"
2. "Thou shalt not use thy credit card for long-term debt"
2. "Thou shalt not bear false witness on thy mortgage application"
This is not to say that the consumers of debt are totally at fault for the meltdown but I would opine that consumers are more to blame when it comes to not being able to pay their debt. Lending organizations (banks, savings and loans, etc.) are in the business of lending money and NOT in the business of managing individuals personal budgets.
If an individual or family borrows money to buy a bigger house than they can affordand then they can't make their monthly payment - who's fault is that? In most cases it's not the mortgage company - it's the unrealistic expectations of the home buyer.
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