by Diana Howard

Created on: November 18, 2008   Last Updated: April 09, 2009

Several times, I have heard this very issue put before influential investors like Donald Trump and Robert Kyosaki. The inquiries came as to whether or not homeowners who took these predatory loans should receive the monetary help, and who was originally at fault. Both men in essence said..."Well, they got themselves into it; they should have to take their medicine." My question is...when are the mortgagors and banks going to take their medicine?

While it is true that the general public has less than perfect knowledge of how the Real Estate and the Mortgage Industry work, those who offered the easy credit are more culpable. The government throws huge amounts of money at elite investors who understand how to "play" the system, all the while allowing them to shelter that money in charitable foundations and the like. The banks refuse to lend the money they have received, using it to shore up their weakening business practices.

The rich hide behind charitable trusts which both sides of the aisle in Congress are responsible for. I'd certainly rather pay 5% to a charity than 40% to the government any day. And for those of you who think that a change from Republican to Democrat regime will change that are sadly mistaken. Those folks with the voting power have influential friends both in industry and the entertainment fields who hold on to those trusts. Therefore it is safe to assume that while the poor did not create this mess, they and their children will end up paying for it.

Is it any wonder that those who never get a break on interest rates should succumb to easy money? It is clear that foreclosures have effected everyone from the poor to the upper middle class. In Mississippi, for example the foreclosure rates are relatively the same as in wealthier states such as New York. Foreclosures nationally are occurring across all income levels. The amateur investor may have led the pack, but everyone jumped on this bandwagon. Real Estate can be a wonderful investment for those who have taken the time to educate themselves so they can invest safely, but for the fledgling investor, there are huge pitfalls. It is unfortunate that easy credit lured the uneducated speculator to his doom.

The Option Arm loan is a prime example of the mortgage industry naively copying the Reverse Mortgage that is offered to seniors. The main difference being that they offered these loans at a much higher loan to value ratio than 65%. This allowed people to fail more easily. Many now are being foreclosed on because of they lost their jobs when the bottom fell out. Interest only loans, Easy credit and lowered credit standards have lured an unsuspecting public into believing that they had a shot at the American Dream, while savvy money men thought they had an opportunity to foreclose on folks while property prices were falsely inflated. They miscalculated as reckless investors often do; only this time instead of bankrupting themselves alone, they took the rest of us with them. Giving them the bailout money is like asking a thief to become security guard at the local bank.

America is no longer the land of opportunity as the playing field becomes more unfair with each passing day. The poor and middle class alike will take the brunt of this as always while the elite money man receives government money for ruining the economy. He will wipe his mouth and walk away from the table fatter than ever.

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