Media Coverage of the Mortgage Crisis

I have a real problem with the way the mortgage crisis is being portrayed in the media, as it’s not at all holistic, and is often reactionary and inaccurate. Everyone whose home is being foreclosed on is a victim, all exotic mortgages are portrayed as subprime, all subprime lending is predatory, etc, etc. The real story is that the mortgage crisis crosses all types of mortgages (prime and subprime), and was a perfect storm of cheap money and greed and stupidity on the parts of borrowers, lenders and realtors. The mortgage crisis is the result of a complex equation, every participant had to “play their part” in order to make the whole thing work.

I understand the need to portray the human side of the equation especially when you’re trying to depict community level impact, but I still feel it’s important to portray the big picture so that no one gets a free pass for their bad decisions. By lumping in the truly victimized in with people who just tried to spend above their means, you actually hurt the causes of the people who have a legitimate case against the lenders/brokers/realtors, et al, who took advantage of them.

Finally, how are we supposed to create viable solutions that can protect people and prevent this from happening in the future if we take a one-sided view of the problem? A common denominator in the mortgage crisis (regardless of the participant), was false assumptions and bad information. Let’s not repeat that error in the media coverage of the situation and in the actions of community level activists who are trying to mitigate the situation and help those in need.

Comments

[Hysteria]

Amen

[helplessobserver]

Your article is right on target. Here in Virginia a U Haul operator leased a unit to a very happy couple heading for California. They had bought a new county home for $130k, held it for 9 months and sold out for $275k. One of our realtors stopped her office on an errand found an impatient customer, showed and sold a house and picked up a $1500 commission for 45 minutes work.

[AlanBennington]

Markham,

Your observations are spot on. I've said it before and I'll say it again.
As Markham reminds us...it takes two or three or four to tango. Everyone knew their hand in this game...they played their cards, now they'll pay the price.

William Jefferson Clinton...disgraced "hound" as he is, was the genesis for the mortgage crisis we are witnessing. He pressured the GSE's; et al to lower their underwriting guidelines for the sole purpose of pandering to his base. Sheep will do as they are told...they willingly went to the slaughter.
And, they will still vote on the left aisle.

When will we realize...Liberal largesse does not work!

[DeadlineNews.Com]

If only the media would just shut up and stop contributing to public opinion.

That's the companion cry-me-a-river implication that always comes with media bashing.

If the media didn't report market conditions at the level at which they are actually occurring, consumer confidence would somehow gravitate to some higher plane of getting and spending discretionary cash.

Never mind that before there was a media and things went awry, the townsfolk hoisted axes, lit torches and marched down to the town square searching for truth in a pile of someone's cinders.

Even if we did live in that insane bizarro world where the media ignored the mortgage squeeze, wouldn't consumers discover they'd been had when the same mortgage application approved two years ago now comes back rejected?

Wouldn't they sort of figure it all out without being spoon fed by the media mind benders?

Less knowledge doesn't make consumers more confident.

It pisses them off.

What has consumers' knickers in a knot isn't the act of reading or watching the news. Such a simplistic rendition of today's complex economic conditions is a twisted denial of reality.

Consumers know what's happening to them. They are more and more often blocked from homeownership. They are losing hope and homes at a rate 100 percent greater than a year ago. The media isn't taking their homes.

Consumers know they trusted a housing market that sold them a bill of goods packaged with corruption and collusion likened to organized crime.

New York Attorney General Andrew Cuomo isn't suing First American Corp. subsidiary eAppraiseIT because of something printed in paper. The suit alleges the company "caved to pressure from Washington Mutual" to inflate property values of homes.

California recently passed a law making appraisal pressure illegal, not because a talking head on the nightly news lobbied Golden State legislators. Many appraisers bowed under increased pressure throughout the last housing boom and consumers were left holding the bag with over-priced homes that are now plunging in value.

Book cooking allegations are rising over the housing boom-spawned mortgage-backed securities sector, the Federal Bureau of Investigations, Secret Service and U.S. Postal inspectors have a growing case load of mortgage fraud which soared to record heights during the housing boom and federal regulators acted (far too slowly) several times in recent years to shore up regulations to give consumers greater protections when they go shopping for home loans.

Most consumers left twisting in the wind wind up financially ruined. Fifty-seven percent of foreclosure-prevention counselors surveyed by the California Reinvestment Coalition found the most common outcome for the homeowners they work with is foreclosure. A short sale outcome was reported by 33 percent of the counselors.

The media's job isn't to tell readers the sun is shining when their home is submerged in three feet of water. If the news is bad, it gets reported. In the next cycle, when the news is better, happy days will be here again -- in ink, online and on the air.

Rather than a society of censorship, we live in a free market where, for better or for worse, merchants get to try their untested, unregulated shenanigans on an unsuspecting public which too frequently doesn't know better to read the small print.

That's where the media comes in.

It's called the right to know.

It's either that or torches blazing across the town square.

The point is don't generalize. There's good, there's bad and there's ugly media.

Professional real estate journalists, for the most part, get it right.

Choose news that really hits home.

deadlinenewsroom.blogs...

Read more on this subject.
deadlinenewsroom.blogs...

[mad jack]

Markham,

How about the coverage of the likes of Cramer and others that get on TV and say don't buy a house now wait until the builders are desperate. Well, I think you tell them to go shopping now! Problem is the media has put so much fear in the market place any potential buyer is going to wait a lot longer.

[Signe]

Don't know if I'm adding anything by commenting here.... but the story on last Sunday's 60 Minutes is a perfect illustration of the media's neglect to fully discuss the current market decline issues. Two borrowers purchases a home with a hybrid mortgage. The rate has changed and although the borrowers can afford to make their new payments, they informed the anchor that they do not intend to. All the advise they have been receiving is to "walk away" as it is stupid to waste money on a depreciating asset. The 60 minute report simply leaves it at that, failing to mention that there are serious consequences to defaulting on a mortgage. The borrowers won't be able to get another mortgage for over ten years, much less pass a credit review process to move into a rental property, this is in addition to the cost of moving. Had I not known better, my "take away" from the 60 minutes segment would be to "walk away" just like the couple interviewed. Why not? When there is apparently no downside.... according to 60 minutes.
The segment also featured Mr. Grant, publisher of Grant's Rate Observer. Instead of questioning Mr. Grant, the anchor permitted him to pontificate about "free money" being the cause of the "subprime mess". Clearly, Mr. Grant should stick to his bond portfolio and his newsletters. This money may have been easily available -but it was certainly not free. In fact, subprime rates were as high as five percentage points higher than prime rates .....
Is the press so biased on other matters...... am I simply noticing the irresponsible reporting on the mortgage market because this is my business? Is a free, unbiased press really just an American myth?