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March 26, 2007
Are there "victims" in foreclosures?
Journalist Kirstin Downey at the Washington Post has an article today that's burning up the Internet today - and burning up a few bloggers who are staunch proponents of self-determination and personal responsibility. Her story, Foreclosure Wave Bears Down on Immigrants(free access, although registration may be required), notes how a large percentage of foreclosures involve immigrants who viewed buying a home as part of the American Dream. Writes Downey: "Nationally, 375,000 high-interest-rate loans were made to Hispanics in 2005, and nearly 73,000 of them are likely to go into foreclosure, said Aracely Panameno, director of Latino affairs for the Center for Responsible Lending."
My question--which is the operative question being asked across a lot of blogs this afternoon--is this: Is everyone who is foreclosed upon a victim? Granted, the story cites a couple examples where buyers feel duped by an agent or mortgage broker of similar ethnic descent who assured them they could afford the house, but realized afterwards they were put into an adjustable rate mortgage where the payments ballooned beyond what they could pay.
In other instances, though, it seems as if this was a case of individuals who saw their friends and neighbors making easy money from owning a home and wanted in to. For a while, housing in frothy markets like Washington looked like a casino where the dice always came up sevens. Interestingly, Downey's colleague at the Post, critic Howie Kurtz, in a online chat this afternoon was somewhat critical of the story, and even agreed with a questioner's point that there was subtle racism at work. The exchange is here, after the jump...
Northern Virginia: Howard, question regarding the headline and terminology used in today's Post story on foreclosures. In both the current washingtonpost.com headline and the lede the term "victim" is used. The word implies predation and an I see an implication that these people aren't smart enough to understand what they're signing when they apply for mortgages. Am I reading too much into this or is there a subtle racism to writing about immigrant "victims"?
Howard Kurtz: I couldn't agree more. I think it was a mistake to describe immigrants who are having their homes foreclosed upon as "victims" when there's no suggestion in the article that they were defrauded. We can have sympathy for them, sure, as we would for anyone losing his or her house. But don't they bear some responsibility for taking out high-interest loans for houses they could not really afford?
I don't know if I agree there was racism, but there certainly was a patronizing tone to the article. Certainly, you feel for anyone who loses a home. But some of the numbers here -- people earning $24,000 taking out a mortgage on a $400,000 home -- is astounding. And in some instances, I'm not exactly sure what they were defrauded out of, since the author cites examples of buyers who didn't put a nickel down, and when they couldn't make payments, they were foreclosed on. So as best I can tell, they didn't lose a down payment. They were out monthly payments, but they probably hadn't built up equity and would have had to pay rent anyway. Sure, they're credit is wrecked for a while, but given the liberal nature of our financial system, I'm sure they'll be able to get a new mortgage in a few years.
For sure, owning a home is considered part of the American Dream, but there seems to be this growing sense that home ownership is a inalienable right and anyone who buys a house they can't afford has been "defrauded." I think some of these individuals would have been better off renting.
The American Dream
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Some of us are trained how to deal with preasure tatics and some consumers are not. What is not talked about is how many people may have said no if someone was not calling all the time and telling them that the deal is beautiful and "Dont Worry". These are the things that are not being addressed. I know because as a service business I know how much preasure loan originators can apply to grab a commission. Throw in some poor english and a really big dream and you have a great money maker depending on what side of the table you are on.
"Come On, Trust me, There is no way this blog post is going to go bad.. Hay I have been doing this for ever... Trust me. I know that once you read this your reader views are going to go through the roof... Really How Can You Lose?... Just sign here and go get your self that lit' something with the extra!"
Ever hear that before? Not in english at least?
Posted by: shane at March 26, 2007 11:01 PM
I'm one of those with no sympathy.
In fact, I'm angry - angry at all the people who took out loans that they couldn't afford. They're the one's who ran up home prices until no one with any sense could afford to purchase one. And then they ran them up some more. Without these greedy, have-to-have-it-now-and-can't-be-bothered-to-do-basic-math borrowers, there wouldn't have been a housing bubble.
Let'em stew. Please Senator Dodd, no bailout!
Thanks for letting me get that off my chest.
Posted by: Jim D at March 27, 2007 01:14 AM
Ever hear of the herd mentality? That's what the tech boom was and now the housing boom. You see all those nice new condos being built and you want one. It's like seeing a highway full of 2007 Escalades, you just want one. Not that you can afford it, you just want one.
As for immigrants, their level of literacy is lower, let's face it, many don't have a college education. They're hard working laborers and their ability to read contracts [and/or consult with an attorney] is not high. One thing I learned when it comes to putting your name on the dotted line, read the words! consult an expert before signing. So glad I don't own property. The biggest pyramid scheme known to mankind.
Posted by: Sally at March 27, 2007 11:44 AM
Hear of the one that wanted a non-owner occupied loan on a property they didn't own? Creative thinking at its best!
Some may be foolish, more probably consider the lender to be.
Posted by: Lord at April 2, 2007 04:32 PM
While responsible citizens put their dream of home ownership on hold because they were intelligent enough to read the fine print, and had the common sense to KNOW BETTER than to buy the house they couldn't afford--many others were out acting wrecklessly AND driving the price of homes up!!
It sickens me to think that they are all now being rewarded by being bailed out or having their loans "modified"....Isn't this going to just delay the inevitable??!! What ever happened to personal responsibility??!!!!
WE are the ones that will ultimately pay for their stupidity!!!!!
Posted by: Jan B at April 5, 2007 05:38 PM
Victims? Yes, i think there are victims in foreclosures - depending on the circumstances. Mind you, a legitimately obtained loan with a legal foreclosure on it...no victim there. But if fraud was involved in acquisition of the loan that may be a separate story....
Kaushik Sirkar, Chandler, AZ Realtor?
Posted by: Kaushik Sirkar at April 5, 2007 07:29 PM