Jane

Treat the Market Illness, Not the Symptoms

You're right that rewarding builders for bad business decisions is the wrong thing to do. But it goes further than builders just building too many houses. I believe if these houses were built well and priced right, and if the industry hadn't gotten the earned bad reputation for not honoring warranties, the houses would sell. Americans have been ripped off by bad builders and their affiliated lenders, (as well as some other lenders), enough to be gun shy now. They know the houses are not well built, and are overpriced. They see billionaire building company CEOs crying for a bailout as if they are the victims. I believe the people in the Charlotte Observer's series "Sold a Nightmare," which led to a federal investigation of Beazer Homes for mortgage fraud, do not see their builder or builder's affiliated lender as victims. Homebuilding got in on predatory and fraudulent lending, artificial inflation of property values, and has been doing shoddy work increasinly for decades. No it's not just that they overbuilt.

Prosecutors Going after Fraudulent Mortgage Borrowers

Anyone who was complicit in fraud should be subject to prosecution, however the instigators should be dealt with more severely. The instigators are those in the industry who created this situation, including those who even now are pushing no-down loans, claiming prices will soon go up again, and throwing in incentives that keep prices artificially high and fool lenders into thinking the buyer paid that much for the house, when they got cash back, a 'free' car, etc.

I've seen several credible sources that state the industry is the instigator. The FBI, plus the lawyer who has the mortgagefraudblog.com site, to name just two. Add another, the IRS, which called many of the now banned down payment assistance programs a scam. FBI found years back that the industry was doing 80% of the fraud. The FBI also warned of this exact economic mess but the agency was given no resources to attack the growing problem when there was time to prevent damage.

Aside from that, some of the "buyers" are just wannabe investors, and some are crooks, (straw buyers). Straw buyers being recruited by, again, industry insiders many of the time. These are not buyers who intend to live in the house. Years ago such speculators and crooks were accused of inflating prices so people could not afford a home, and nothing was done. Why? Because it was "only" consumers getting hurt.

I do agree that some buyers who live in the houses were greedy, foolish, and at times lied to get the loan. I don't believe in going soft on buyers who did these things.

But some buyers were victims of mortgage fraud. They were certainly as much a victim if not more so than the banks now whining for a bailout. Where were these industry professionals experts when they should've been doing their due diligence? They were looking the other way, thinking of that big fat commission, and expecting to stick someone else down the food chain with the bill. Though more of this view is creeping into mainstream media, it's not near enough. The CBS's, ABC's, NBC's MSNBC's and Fox's etc's reporters still are ignoring the truth about this; that the real estate and finance industry lobbied its way into immunity for a giant fraud they perpetrated against this country, and they are not being held accountable. Blaming home buyers is a diversionary tactic as home buyers were duped, defrauded, scammed, whatever, much more than they were sophisticated criminals like industry insiders were.

Perhaps the media focuses on the little people, the liar loans and fool speculators, because that pleases the industry advertisers more. I have seen some real sacks of crap shown as an example of buyers hurt by the housing 'crisis.' Why doesn't the media show more of the actual victims of fraud, those are people who deserved the govt's help years ago when they reported the fraud and were told to just "get a lawyer." Why doesn't the govt now tell these crybaby builders, banks, etc, to just "get a lawyer?"