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One of my first jobs out of college was as a mortgage broker for a (gasp!) sub-prime lender . Before you get out the tar and feathers, let me state for the record that this was before the term “sub-prime” was common terminology. Let me also state that I quit after less than one year because, even in 1994, I felt I was a practicing a form of legal loan sharking. 

Currently, the supporters of aid for those who may lose their homes due to “unfair lending practices,” seem to be pointing their fingers at the mortgage brokers.  Since these guys were actually in the room when the borrower signed on the bottom line, they make the easiest target.

But why are lending companies being pegged as the ones who preyed on helpless, unsuspecting consumers?  Doesn’t culpability lie with the realtors who listed and sold the home?  Last week one couple in California sued their realtor for selling them a house for $1.2 million dollars when a similar home, just down the street, was on the market for $200,000 less.  The kicker was the less expensive home had air conditioning and a pool. Um, you mean someone paid over $1 mill for a pad that doesn’t even have air conditioning?!

I always thought it was amazing that a home appraised for just the “right” amount, coming in within thousands, or even hundreds, of dollars of the sales price for the home. I heard a story on the radio about one appraiser in Florida, who said he was told by a realtor to appraise properties for a certain amount or he wouldn’t get any more work. When the appraiser refused to fudge the numbers, he was essentially blacklisted by realtors in the area. 

Ultimately, doesn’t the responsibility lie with the consumer who is borrowing the money?  I know several people who admitted to taking a home equity loan or cash out refinance in order to pay off automobiles, take vacations, and pay for big screen televisions.  

Certainly there are those unsophisticated borrowers who do not understand the legalese of a Truth-in-Lending Statement and a Deed of Trust, and those borrowers should get a break.

Blame the consumer, the realtor, the appraiser, the lenders who encourage cash-out financing. Everyone should take responsibility. Now, the ones who will benefit will be those who didn’t buy into the hype of an ever-expanding housing market, as well as those of us “lucky” enough to be renting!

Amy

This entry was posted on Saturday, March 8th, 2008 at 9:09 am and is filed under Financial. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.