The American Nightmare: Subprime Mortgage Crisis, 10 Years Later | Hacker News Reader

The American Nightmare: Subprime Mortgage Crisis, 10 Years Later

thepennyhoarder.com

23 pointsaxiomdata3166 comments

From my experience with friends and family during this time, the "nightmare" is largely due to people feeling "This is _my_ home!", when is really not - they were highly leveraged and it belongs to their debtors. They couldn't/wouldn't grasp the idea that borrowing so much money means they lose something if they don't/can't pay up.

I sympathise that losing a home must be terrible, but many people I knew marched right into interest only loans, second mortgages, because they wanted nicer place or stuff.

At least in my circles, warning/begging people not to borrow so much fell on deaf ears during this time. The article portrays this as the lenders issue, but it goes both ways.

"Banks didn’t verify borrowers’ occupations or incomes. They qualified people for bigger loans than they could afford. They offered loans with monthly payments so low that borrowers owed more after they made a payment, rather than less."

This is part of the problem though. Banks and other lenders should be held responsible for handing out these loans. The onus cannot just be on the homeowners. For every person that simply wanted nicer stuff there are plenty who were fooled into thinking they could afford something that they couldn't.

Yes, but my point is the majority of people I knew weren't "fooled" or "uneducated", they took it because it was what they wanted in spite of the danger and warnings. Banks certainly have a ton of responsibility for this, but I'm also not swayed but the slow-fade sob stories that people were "taken advantage of" by the banks either.

They are "lucky" that they can walk off after handing over the keys to the house even when the house value has depreciated to far below the sale price. Places like Australia, the bank has the right to chase you up for the debt AFTER foreclosure if the house value has decreased.

This is a bit like maxing out the credit card. It's tough for the children and unfortunately a lesson has to be learnt by the parents not to live like the "moviepass economy"

They have recourse loans in many states here too, only California and some other states have non-recourse mortgage loans.

Naturally the lenders should be held to higher standards?!

The lenders are highly paid professionals that do this 40h / week.

The borrowers are normal people that do this once or twice in a life and might only have a very basic understanding of financial affairs.

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