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There have been several news articles written lately about American subprime mortgage problems. Two news stories in particular caught my attention. The first is an article titled Mortgage Woes Unlikely to Be Cured by Congress and the second is titled Fed urges lenders to ward off mortgage defaults. Both of these articles present ideas relating to solving the current lending crisis (if there is, in fact, a crisis) by allowing people to defer payments or get some sort of other relief from their payments. This makes me wonder what is wrong with the United States.
When did the United States become a country of entitlement and a lack of personal responsibility? I'm sure that plenty of people can provide me with anecdotes of the collapse of personal responsibility and the increase in a sense of entitlement. It astounds me that people actually think that Congress should provide help for people who are on the brink of foreclosure. This may seem impolitic and controversial to some, but I believe in personal responsibility. If a person is making $1,200/mo after taxes and they get an adjustable-rate mortgage with payments of $800/mo then they shouldn't be bailed out with they suddenly can't pay the note because the rate went up. Do people not understand the concept of adjustable-rate? Do people not understand the concept of living within their means?
My wife and I recently bought a home and we did so with some trepidation because I knew that once I signed the mortgage I was locked in and was promising that I would make good on the payments for the entire length of the mortgage (or until I paid it off, whichever came first). The thought of buying a house I couldn't afford and then letting people feel bad for me because I couldn't make my payments and bailing me out never once crossed my mind. I fully recognize that some native English speakers (a small percentage) are too intellectually challenged to actually read and comprehend English and so they may be duped by a fast-talking mortgage broker. I wouldn't have a huge problem if people bailed them out because they just can't help themselves.
The vast majority of Americans, however, should be smarter than that. When a person signs a mortgage document the terms of the mortgage are very clear and they list out the interest rate, the monthly payment amount, and any escrow payments (for insurance, taxes, etc). The terms also list whether the mortgage is an adjustable rate mortgage and, if so, how often the rate adjusts. People that claim to be surprised that their rate adjusted are either liars, intellectually challenged (see above), or stupid. They are stupid because they signed a document they didn't understand and then expect people to feel bad for them because they lack the personal responsibility to actually make sound decisions.
In the second article I cite above, the chairman of the FDIC said It is vital that mortgage servicers work proactively with borrowers facing much higher payments as their interest rates reset. Why is it vital that mortgage companies spend money to bail people out who are too stupid to take personal responsibility for their actions and actually ensure that they can afford something before they buy it? It frustrates me that my country is filled with people who seem incapable of living their lives without the Nanny government watching over them to make sure they're safe. In the end, if these people lose their houses then they have nobody to blame but themselves. Nobody should be bailing them out. That would only reward bad behavior.
End Notes:
I recognize that a small percentage of people are in trouble because they lost their jobs through no fault of their own. Those people are not the people that I am writing about. People who are the victims of a job layoff or debilitating injury should probably have done a better job saving up for emergencies, but they are not the source of my ire and I would not have any problems with people bailing them out.