Mortgage Meltdown:"American Casino" update

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Permalink Reply by Jason Zavala on September 8, 2009 at 9:40pm

Rob, really dig the film clips. Very compelling, but a question: I'm an uber-antipred-advoc, but I stopped the clip at 31:20 and looked at the wall street monitor for a particular bond. The $800+ million bond with over 30% delinq. 90+ days was assumably averaging a credit score of 635. Somewhere there is still a huge dialog missing that is still about comprehension and/or homeowner accountability. I recall that far from a majority of my fellow local residents were "duped". Sure Wall Street behaves very badly, Senators act woefully reckless as they can oft do, and regulators now say "Who knew?", but shouldn't there be something referencing broader consumer negligence as well? Right argument, wrong film? Net-net, I don't feel like we can get rid of the wolves, or how they adapt, but we could learn how to dress ourselves less like sheep...

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Permalink Reply by Robert J Strupp on September 9, 2009 at 8:08am

Jason,
As always, great insight! There is no question that borrowers need to take some responsibility for the mess. In fact, In my workshop presentations, I now include a piece called "housing literacy" to cover purchase and loan issues from contracts to closings. I suggest that the "key to success in real estate is not 'location, location, location', but EDUCATION, EDUCATION, EDUCATION!" That said, I think it is a mistake to conclude that a 635 credit score equates to being "dupe proof". In the 2006-2008 phase of foreclosures, I believe the deception was so massive and enabled by a "nobody cares" approach to the process, even credit-responsible people were being taken advantage of. This year, with more and more foreclosures being driven by unemployment/reduced income, there is clearly the need for consumers to address the potential consequences of their choices. From some of the accounts I have seen, this message may be getting through...consumer spending and debt are lower than in recent times. Of course, this may also be due to tighter credit, not wiser consumption. The challenge is getting the word out and protections in place so we do not to make the same mistakes again without swinging the pendulum too far.

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