Who is at fault in the housing crisis, buyers or brokers?

Question

Do we blame people making $30,000 trying to buy a 350,000 house, or the broker who approved it. How do you make a payment on a 300k house if your monthly income is less than $2500 after deductions?

Answer 1

I'm going with the broker as the main cause. They have the knowledge of what is required income wise to properly maintain a large loan, and KNOWING that there is going to be a balloon in payment after a few months, their actions border on criminal intent.

A lot of 'flippers' had a hand in the crises also, but a bunch of folks got 'stuck' by their loan officers. The get rich quick 'flippers' knew that they had just x number of months to dump the property. However a lot of folks got the shaft from their loan officers 'failure to disclose' WITH EMPHASIS on the fact that the loan payment would increase after x number of months.

Another problem is that the American Public has not been properly taught how money and compound interest works. Our school systems are too intent on teaching worthless content and sports that they fail to get the real life issues properly instructed. Giving a kid the education that can make him lots of money is great, but teaching them how to hold onto what they make would be BETTER...

Answer 2

A house is only worth what  a buyer is willing to pay.... If a house is presented for sale for a price and ya want it the appraiser will do his best  to help  the broker get the sale..... i know from experience..

Answer 3

You could place blame on many different things, but mostly I blame the education system.  We need to educate people from an early age about the good, bad, and the ugly sides of debt so they can make better informed decisions in the future.

Answer 4

They are both at fault.  People should know better than to buy what they can't afford and they need to take better responsibility of their finances.  However, the brokers and lenders shouldn't have given money to people they knew couldn't pay it back.

Answer 5

I think it depends on the situation.

Either way if people are loosing their houses and their credit and have hardly any money to invest in the economy the economy will eventually fail.

Should we really be looking for someone to blame or solutions to the downfall?

I think both should be blamed because the broker was willing to prey on the "American dream" by urging the consumer to buy such a home when the broker knew that they consumer could not afford the payments. Consumers are so lost in the dream, what they could have, that they don't think about consequences.

I see it this way, we depend on professionals for answers on topics in which we ourselves are not experts. When a doctor diagnoses a patient with an infection, most of us rush to the pharmacy buy the medication on the prescription follow instructions and hope to feel better in the morning. We should be reading more into what the side effects of the medication are, how will this affect us, etc, but we are just concerned on what will make us feel better and we trust in the doctor's expertise.

This is why I blame both, it takes two to tango.

Answer 6

Both.  The lenders got greedy and started approving people for loans that they knew they could not pay.  The people taking the loans were even more stupid for getting into them in the first place.  People were buying houses that were way too big and far too expensive for them to ever pay for.  It was only a matter of time before the whole mess came crashing down.

Answer 7

everyone who was a participants in the feeding frenzy is guilty of a percentage of the fault...

but it was the greedy people in all of the positions that fed the frenzy...

People could flip properties at the height of the frenzy and make 75k or more without touchign the property... I knew several people who sold their house for an inflated price, above their already inflated asking price within a couple hours of it going on sale...

I knew one who sold a house before noon and bought another one the same day...When the market is that hot, it has to come to a screeching halt, and now it's time to pay the price... I also have a friend who is upside down in his first house so bad, after re-financing the first one for 100% of it's (overvalued) assessment, to gather the capital to secure the building of a second luxury home, with the plan that they would sell the first one and pay it off and be all happy...

Well the first house has de-valued by 60k and they are upside down so bad that they can't pay the predator loan off because the payment is so high, including the penalty for keeping the loan past 2 years that it is now in foreclosure...

This is just one example....

Everyone is to blame, but it would be the lending institutions who fed the frenzy with (Stated Income) loans, that allowed people to get into homes they really couldn't afford...

We're all tempted to get into debt over our heads, look at credit cards... Many of us are actually in pover our heads and don't really see it, because we're making the payment every month but the balance doesn't really seem to go down all that much, especially since we use it every now and then for big purchases such as tires, airfare, hotel, rental car...etc... and the balance goes right back up....

Realtors are to blame, because they fed the frenzy by overstating properties to prospective  clients who were happy that their home was worth way more then they thought, according to their realtor associate.... So it was a vicious circle..

Now think of this as Musical Chairs...if you participated in the market and got out before it crashed, you're OK...but if you played and were left holding an over inflated property when the music stopped, you don't have a chair to sit down in and you're basically going to take a good hit...

Those that rent, will do ok as rentals are a dime a dozen now, you don't need a paper to cruise for rentals, just drive up and down an area you'd like to live in and the signs are hanging on properties like sausages on a smokehouse wall...

Rents are coming down on those properties where the landlords realize if they keep the rent so high it'll just sit vacant...Better to collect minimal rent than none at all....

LOL... It's a renters market now... there are benefits to renting... especially if your unsettled and don't want to make a big commitment...

The market will bounce back, but you hear everyone talking about 1-2 years...LOL try 8-12 years for this to correct itself... that would be more likely....and that’s just to recover the reduction in the value of your over-priced property... That doesn't mean you're going to sell it at a gain, it just means you'll be breaking even about then Sorry but this is the temperature of the market today....

Answer 8

The mortgagers who looked the other way at all the questionable loans being made and failed to demand pay stubs and proof of income and the borrowers who lied on their applications..................

Answer 9

Both.

You cant blame one without the other.

I have a cousin, a single mom of 2. She makes around what i do-right around 50k-we work for the same company so i know roughly what she makes. She bought a house for $550,000. And in this part of Ohio that is a HUGE house. I know in some parts of the country that might not be considered much or a small house, but in this area it is. On the other hand around the same time i bought a nice sized used house in a ok area for around $110,000. I have yet to have a problem making a payment.

Regardless within a little over a year she ended up falling behind on the payments and going into foreclosure.

Of course part of me feels bad for her, but then again she did it to herself. She has a college degree, shes a smart woman but just like so many others very greedy and has to "keep up with the Jones" if you will. Thats what has caused so many of these problems with people losing their homes. Buying way too much house for what they could afford.

Answer 10

The ---------  greed  ------------of the

--- Get established over night housing brokers ---

And the mega corp. that saw tons of money to be there for the picking from the suckers out there that don't know how to read ... the fine print ...

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And Who ever want to make a million doing nothing but nailing the buyer to the dart board

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This is the American way

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Watch corporate American in the next decade and what will happen to it

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Shifting all its production to another country to save a buck and put it in their back pocket

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Yes down the tubes for that one too

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When this balloon pops watch out for all the confetti aka money that will be falling and no one will want to pick up any of the worthless stuff

aka American Money

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