Don't put burden on homeowners

10/27/07
The national mortgage crisis is hitting home. Southwestern Connecticut hasn’t hit the worst of it yet, but already thousands of families are in jeopardy and many have already lost their homes.
With reports that up to 20 percent of all mortgages last year came from the high-risk subprime market, the bad news will only get worse. And Connecticut’s cities, with Bridgeport at the top of the list, stand to take the biggest hit.
The question on the table now is what to do about it. What seems beyond question is that thousands of people who otherwise would not have qualified for a loan, and lacked the financial wherewithal to pay for a house, were approved for mortgages anyway. Now they have a home they can’t afford, and face the prospect of being tossed out on the streets.
But before lawmakers direct all their opprobrium at the subprime recipients, they should remember that there’s a reason it’s known as “predatory” lending. Unscrupulous lenders take advantage of people’s lack of expertise to rope them into damaging arrangements that look agreeable in the short term, but spin out of control thereafter. Most recipients are guilty only of believing the hype that everyone in America deserves, and has the ability, to own a home.
So when Rep. Christopher Shays says, “I can’t imagine helping people who should not have gotten a loan in the first place,” it’s worth wondering who he’s taking out his anger on. Is it the people who were defrauded, or the ones who did the defrauding?
No doubt there were people who gamed the system and applied for subprime loans when they were well aware they had no business playing the mortgage game. But to assume anyone caught up in this was willing to take a chance on losing their home, and putting families at risk, is a leap too far.
Sen. Christopher J. Dodd and others are proposing legislation to further regulate the subprime industry, and that’s important, as far as it goes. In the end, though, after the immediate crisis passes, there will always be lenders looking to prey on undereducated potential buyers by locking them into deals they don’t understand, but which bring windfalls to the lender.
That’s why education is the most important remedy. Inform people of their rights and obligations, and keep the phone lines open for anyone unsure of what they’re getting into. Buying a home is challenging and stressful, and almost no one understands all the fine print. Don’t put the onus on every homeowner to need a law degree to do what’s right for their families.