Who is to blame for the subprime mortgage loan market implosion?

Question

Lenders, borrowers or regulators (the government)?

Answer 1

THE BORROWERS. Everyone wants to point fingers at the lenders, but that's just a bunch of whiners refusing to accept responsibility for their actions.

If you have to do a no documentation loan because the income you "stated" on your application is way the heck above what you really make, then you know you're getting a loan you shouldn't based on your true qualifications.

If you have to take an adjustable rate loan or an excessively high interest rate to get into a property, then you know there is a reason why the lender is charging you more than an A-paper borrower--because you're a riskier investment.

Did people who borrowed money from the lenders when their property was appreciating in value complain about these "predatory" sub-prime lenders? No. People only started complaining when the properties stopped going up in value and they weren't able to bail themselves out of their risky mortgage by selling or refinancing. Now they're angry at the mortgage lenders that are losing billions of dollars be having to foreclose homes and sell them for less than the loan balance.

The world would be a better place if people took some responsibility for their actions and stopped trying to point their fingers at everyone else.

Who is responsible when someone shoot someone else with a gun? The gun manufacturer? The government? Or the person that pulls the trigger?

Answer 2

I would say a little bit of lender and a little bit of borrowers. Lenders because they got people into the 1% option arms and people went upside down and not only that they couldn't afford the payment when the rate adjusted. Also lenders/investors would take loans that made NOOOO sense just to make money. And of course borrowers for not doing their homework on what sort of loan they were getting into. I think that this isn't a HORRIBLE thing. As it's going to weed out the shady lenders and keep the good. I know it sucks for us homebuyers now but in the long run it's going to be a good thing. Remember the economy flexes. We have good times and Bad. We always seem to come back bigger and better than before. Hopefully people will learn from their mistakes. Oh and ALSO I think that we were at a point where homebuying was a little too difficult so that's why they made it a whole lot easier and now we are getting to the point where it's a happy medium.....not having to come in with 20% down but not being able to buy a house with no money out of pocket. =0)

Answer 3

The borrowers are to blame for their own actions. Only if you have a broker/lender who fails to properly reveal the ramifications should that lender be held to blame. Do we really feel that Americans can not think for themselves? What does that say about our education system? And, our politicians that limit spending on schools and teachers? OK - so I guess the schools are to blame for this sub-prime mess, just like gun manufacturers are to blame for murders by shooting.

Sub-prime lending is a great tool if used properly, not so great when abused - like any other product. Note that the percentage of American home ownership is way up, even after some get foreclosed.

Oops, did I say all of that?

Answer 4

Lenders, and particularly foolish mortgage brokers. A broker who sells a client a mortgage that the borrower cannot pay for is an idiot. This is not an area really in need of more government regulation; it is simply an area where customers need to read the paperwork. One piece of government regulation that might be useful is to require that all documents to be signed at a closing must be delivered (as copies) a day or two in advance so that they can be read.

Answer 5

The lenders, primarily. They made loans to borrowers knowing full well that when interest rates on ARMs floated that there was little chance for the borrowers to be able to make the payments.

Regulators probably share some blame for not monitoring things closely enough, however the current administration's "hands off business" approach leaves regulators with little in the way of resources or support to effectively monitor their charges.

The borrowers are largely victims of greed on the part of inadequately regulated business.

(Your Republican government working for YOU. But only if you're a business.)

Answer 6

The borrowers. We cannot protect people from themselves. If the government put down some requirements for people to qualify for the loans, then people would have claimed that the government was preventing people from owning homes.

If they didn't lose their money in the housing market, they would have lost it some other way. A fool and his money is soon parted.

People do not want the government involved until they fail at their get quick rich plans, and then they want the government to give them their money back.

Answer 7

In my opinion the "blame" goes to the predatory lenders who chase these people with existing credit issues to refi and the refi again...their intent, understandably, is to make money on the commissions etc..;however, the ethics of loaning money to persons unlikely to be able to pay back the loan is in-moral and overall is not in the best interest of the aggregate economy.

As you noticed, I quoted "blame." This was done because I truly beleive that we as Americans have to take responsibility for our actions. If these lenders are attacking, then it is up to the consumer to sort things out; however, the very thing which has brought our society to the advancement seen today, will be our demise. Information. Too much information will hurt us as we cannot always sort good from bad.

Answer 8

Blame the professionals: the lenders who knew they stand little chance of paying back huge loans. It's a free country what can the government do, limit capitalism? The lenders should have more ethics and it is their responsibility, that's why it's not a overly leftist government in the first place, because it is those people's responsibility.

Answer 9

The Borrower's. 100% No Question.

If you stood before me, and said "You will have to pay 500 bucks a month for 2 years, and after 2 years, it will go up to 750 bucks..." It would be up to me to decide if I could afford that or not.

YES, Subprime rates and programs are higher on interest... b/c they are more of a risk due to the credit history of its customers.

I wish my car payment was a little lower than it is right now. Am I supposed to blame the dealer who sold it to me?

Answer 10

The three factors

Loan Officers and there pushy brokers
Home owners that take above 100% mortgages.
1-800-Anynumber Appraisers

Simple as that