vc318

Hello everyone! Here's the new topic for the week:

Not a shock with the economic crisis and such, but this popped up in the news:

New set of borrowers behind on payments - 05/31/2008 - MiamiHerald.com

So, who do you think is at fault for the housing slump? Should government step in to help or stay out of it?

Please share your thoughts.

ceilirose

The mortgage lenders who gave mortgages to people who didn't really qualify for them and made big money.

But, honestly, I can't wrap my head around people signing those mortgage papers and not knowing that their interest rates might increase in a few years. I think they have a part in it but too many people saw easy money and went for it.

sunnykerr

I think it's easy to be stupid when you think you can get your dream. I think people lose sight of the bigger picture, think they can do more than they actually can, get more money than they really will...

Having said that, I do think the way the economy's going is to blame. So I don't know that one person or one group of persons is to blame.

vc318

I'm sure it's happening nationwide, but here in Florida we're feeling the housing slump TREMENDOUSLY. Tons of "For Sale" signs up for months, people abandoning their homes, etc. It's just crazy. I feel that the banks are at fault for this mess. They approved people for loans that they knew that people could not pay back for in the long run. Just greed at work, as usual. Now, the people who are trying to do their best and make their mortgage payments have to wait for this whole mess to get better before they can try to sell their home.

ceilirose

Bear Stearns collapsed a few months back in part because of their lending practices. They were heavily involved in the sub prime mortgage mess. The banks and the people who made the decisions on the loans bear most of the responsibility.

Raonaild

I think the responsibility is not so much with the banks or the people who signed mortgages that they shouldn't have, but with the lack of government regulation that allowed the banks to deal in these crazy subprime mortgages.

Here in Canada, regulations are tougher and we have not had the same problems in our real estate market, even though the market here has also seen huge growth (both in terms of prices and new home construction) over the last decade or more.

The really terrible part of it all is that economists have been warning about this for many years and yet the US government did nothing to stop it, and arguably made it worse.

sunnykerr

It really does seem, at times, like there's a whole system out there that was created somehow for the sole purpose of leading us all in ever-deepening debt. If it's not the student loans, it's the credit cards; if not recession, it's real-estate slumps.

I'm very glad to learn that there are some laws governing real estate in Canada. Of course, I've watched too much Holmes on Homes to make that a definitive tap on the general Canadian back.

It's a delicate balance, isn't it? Between personal responsibility and governmental responsibility...

Raonaild

I was speaking more of the financial side of the real estate market, and what the banks and lenders are allowed to do. Holmes on Homes is more about building code regulations and laws about liability when things go wrong with a house or renovation, which, as far as I know, have little to do with the real estate problems in the US right now. I am also quite certain that the same problems Mike Holmes runs into in Canada exist in the US as well, and that he deals with the worst of the worst problems, not everybody goes through what the people on his show do.

sunnykerr

I guess my attempt at broadening my reply fell pretty flat, huh?

sm_love_dc

why is it that the morgage banks can lend large amounts for money to those who can not afford to pay one fith of the house cost. Living out side you means is not the way to fix the economy. The trickle down effect is now being felt in canada. The federal reserve and the bank of canada have a real problem on their hands now. Too many people want to live the life they see on cribs and not many are able to afford it. Keeping up with the Jones has gotten out of control.

sunnykerr

Apparently, it seems to be because there is a lack of proper laws regulating this industry.

mh67511

Oh so many people to blame, where to begin? First you've got the banks and investors looking for more ways to make a buck. Then you've got the mortgage brokers working on commission trying to sell as many loans as they can. Then you've got the credit rating agencies packaging up toxic loans and rating them AAA. Then you've got the government lowering interest rates more and more and more. And finally you've got the homeowners who are apparently unable to read their contract or purchase a home within their means.

It's all a mess but I pray there is no bailout -- we, even though of us who had nothing to do with this, must learn our lesson the hard way this time! I'm sorry to all those homeowners, banks, and investors who are directly hurt by this, but their greed is now affecting so many others who weren't involved!

Angry Renter: Oppose the Mortgage Lender Housing Bailout -- I signed their petition because I am an angry renter!

vc318

I was talking to my mother-in-law and she said this whole real estate mess happened in the 80's too. Boy, don't the banks ever learn there lesson?

And I know we're not fortune tellers here, but does anyone know when this slump we'll probably be over with? I'm trying to figure when is the best time to put my condo on the market.

sm_love_dc

This is an issue that comes up every few decades yes, but it is not just the realistate market that contributes to these issues. The cost of living has gone up in all areas since the 80's. There has to be an end to the consumption that North Amercia is going through.

vc318

It's true - North America is known as "the land of consumers." However, I think spending your money is your business, but that's if and only if you have it to spend. Quite frankly, I wish we could just ban credit cards.