Subprime bailout rant
Friday 31 August 2007 at 08:45 am(I actually wrote this last weekend and wasn't going to post it. But seeing this pissed me off so much that I decided to post it anyway. When I bought my townhouse, I deliberately bought way below my means, at a 5.5% fixed 30-year rate, with a 3% down payment on an FHA loan. Where's my frigging bailout?)
The news has been deluged with stories about the subprime mortgage fiasco lately. Some of the stories are profiling the "victims" of the collapse, who were tricked! TRICKED! into buying houses that were far too expensive in the first place with no or a financed down payment, who signed up for ARMs knowing full well that their interest rates would skyrocket later (but conveniently didn't think about this until the rates went up), and who are now losing their houses to the surprise of absolutely no one who can add and subtract.
One online article portraying the lenders as mustache-twirling villains really got to me, with language like "Through a common practice called "steering," unsuspecting families are guided into the most expensive, riskiest subprime loans" and "Brokers are on the front lines, but the lenders are the ones who invented the scams that are bleeding borrowers."
No one put a gun to anyone's head and forced them to sign up for these mortgages, or buy a house at all, just like no one forced me to rack up close to $25k in credit card debt during a particularly asinine period of my life. And let me tell you about my first car loan, which I financed through the dealership without reading very carefully; it was a pre-computed loan, not simple interest, so the extra payments I made didn't save me a cent on the already locked-in total. Absolutely stupid, but no one's fault but my own for signing something I hadn't checked over. (Thanks, Hendrick Chevrolet, for this valuable life lesson!) I could also mention the time that CarMax tried to get me to take their financing at a couple interest points above the loan I'd already arranged with my credit union; I have no idea why they thought I'd even consider it, but the fact that they tried makes me suspect that some people really are that stupid.
If you have bad credit, are awash in debt, and can't come up with a down payment, don't buy a fricking house in the first place, especially as a risky "investment" during a housing bubble. Renting has a lot of advantages, as any homeowner can tell you. If you're going to sign your name on a contract that requires you to repay a loan to the tune of several hundred thousand dollars, it's your responsibility to do due diligence, read the damn thing, and take responsibility for signing on the dotted line. Mortgage lenders and credit card companies exist to make money, so of course they're going to pour money into advertising to convince you that owning a huge house is the American dream, that you can charge your way to happiness, and do their best to hide all the bad news in small print. The fact that you bought into their bullshit doesn't excuse you from responsibility. This isn't an evil conspiracy by the financial industry, it's just greed and stupidity on both sides.
