The Death of Direct Sales

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Posted By: LetsGoBucs

It is fundamental common sense that people don't lend money unless they're confident it will be repaid.
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Todd, I think that this is a good and fair point. And it points to the breakdown of government regulation that permitted a new investment class to exist outside the scope of any existing oversight. Unfortunately, the Congress helped push the idea along of lending to those that shouldn't have qualified for a loan. Though I will also state that I think its down on the list of causes to the overall mess.

I do believe though that even in the cases of the "hardest" sell, the buyers still have responsibility. As I clearly stated in one of my posts I believe the government should step in and help elderly homeowners that refinanced into ARM loans. I would hazard that 70-80% of them were victims of crooked salemen and our tax dollars should be used to keep them in their homes.

Outside of that though, what has happened to "buyer beware"? During the housing boom most traditional banks still operated normally. I went to my local credit union to see what type of mortgage I could get when I thought about buying a house. They presented me with a few options ranging from a 15 year mortgage to a 30 year mortgage. And the amounts of the mortgage were very similar to what you would find you qualify for in a mortgage calculator. But I could go down the street to a "mortgage lender" and get double the size of the mortgage...only now it had variable rates of interest, different interest payments in different years, etc. Now if I would have chosen the second option and bought a house twice as big and expensive, don't I have responsibility for that action - irregardless of how well the salesperson spoke about the "upside" or "market"?

I have helped a friend move out of a house he can no longer afford. I feel really bad for his two daughters. And yes he has moved his family into a two bedroom apartment and later he might have to move in with his wife's parents. But what else would you suggest? He's my friend. But lets be clear that he lived far above his means, he took trips that he couldn't afford, he owned two large gas guzzling cars, and they had credit card debt equal to about 1/3 of his pay. They never failed to buy $50 clothes for the kids instead of $10 clothes. It goes on and on. And I don't really think he is alone in this.

Unfortunately, we have two very different sets of people in this country in terms of finance. Those that live within their means and those that don't. We need to be finding ways to reduce the size of those that don't.

Perhaps its because I grew up in a lower middle class household (and there were a few years that was stretching it), or becuase I've lived in parts of the world where people earn 8-10K USD/year and live within their means - and enjoy their lives. But something is really wrong in our country in regards to spending money. Its wrong at the governmental level, and its wrong at the individual level for a big chunk of the population. And I see no way of having that change other than through personal responsibility.