by Marci Leigh

Created on: October 10, 2010   Last Updated: October 11, 2010

It is difficult to miss the many news and magazine articles focusing on people who are facing foreclosure on their home.  You cannot help but agonize about the distress these folks are facing.  So many good, sensible, hard-working people were victims when not only the housing market collapsed but also when unemployment skyrocketed.  Do they deserve a government bailout?  The answer is “No”.

The housing market in the US soared at an unprecedented rate in the early 2000’s.  Buyers were competing for available homes on the market, raising their offers without a thought to the fact that they were the ones driving up the prices.  Lender programs, started during the Clinton administration, were available with little or no money down.  The goal was to make homeownership affordable for lower income Americans and those with riskier credit.  Andrew Cuomo, then Housing Secretary, applied pressure to lenders to make more loans to a more diverse market. 

Yet when it all came crashing down, the blame was focused on lenders.  Today, the outcry is that lenders should have never made these high loans.  Lenders made loans based on the current market value at the time of the loan.  The market value of any home is what a willing buyer will pay and what a willing seller will sell for.  It was the buyer’s of these homes, inflating the purchase prices, which created the current situation, running to the closing table to sign the promise to pay agreement.  Now they do not want to continue to make payments and want the lender to lower the amount of the debt or the government to bail them out.

When the job market also took a tumble, many people found themselves needing financial help.  For those that had owned their homes 5, 10 or even 15 years, they were shocked to see that due to the housing market collapse, they no longer had any equity to draw out. 

There has been criticism on those who are buying many of these foreclosed homes, repairing them and renting or re-selling them at a profit.  They are not to blame nor did they cause the problem.  Neighborhoods that are experiencing a high foreclosure rate welcome these flippers as they are helping restore values.

This economic tragedy has shown us that we are a society that does not save, does not want to wait until we can comfortably afford something and that, for some, there are no consequences for bad decisions.  Now there are many that want the government to bail them out.  We need to be responsible for all the decisions we make. 

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