The American Way

“We may have as many as 1 million to 3 million people who could lose their homes, not because they lost their jobs, not because the economy collapsed, but because they got bad deals on mortgages,” said Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking, Housing and Urban Affairs Committee. [Source]

Kind of tugs at the heartstrings, doesn’t it.

I mean, how can anyone help but feel bad for these poor people who “got bad deals on mortgages”? These people could lose their homes! Shouldn’t the government help them out? Isn’t that what government is for?

Stop those bleeding hearts for a minute and let us look at this situation with a little more reason and a little less emotion.

What exactly are these subprime mortgages?

According to the knower of all information, Wikipedia, subprime lending is

the practice of making loans to borrowers who do not qualify for the best market interest rates because of their deficient credit history.

So, in other words, many of these people should not have been getting mortgages in the first place.

Don’t get me wrong. I really do feel for these people. I do. Just last year, my husband and I had to face the fact that the home we wanted to purchase – which was just a meager double-wide manufactured home on a half-acre of land – was not really within our means.

And we had a loan approved from a traditional lender.

See, on paper, we could afford it, but we knew it would put us in the position that any small change in our circumstances – illness, layoffs, home repairs – would force us to go into debt, something we are steadfastly opposed to.

Rather than rush to get into our own home when we were not financially ready, we decided to wait until we were in a better position to buy. A very hard – and unAmerican – decision, to be sure, but the right one nonetheless.

The crisis that we are seeing with the foreclosure of so many subprime mortgages is an insight into what is wrong with our American consumer culture – We want more, we want it now, and we want it on credit.

The problem is, when the time comes to pay for it, we don’t have the money and we want someone to bail us out.

There is a catastrophe looming on the horizon for many Americans, not just those with bad credit or subprime mortgages.

Those who are buying up consumer goods (that they cannot afford) on credit, then taking out a home equity loan to pay off that consumer debt, only to continue their bad spending habits, are in for some hard times when it comes time to pay the piper.

The problem goes much deeper than subprime lenders. It goes to the very core of what America has become.

After all, this is a country whose response to a terrorist attack was to go shopping.

If the government really want to help, it should provide good, solid financial education in the public schools.

And politicians should be out on the stump promoting healthy financial practices, instead of using tax payer dollars to enable bad financial decision makers.

Financial education might not be a sexy as helping the poor, innocent victims of the big, bad mortgage lenders keep their homes, but it would go a lot further to solve the problem.

You know, if that is what the government is supposed to do.