Rise of Subprime Defaults Asks Borrowers Some Tough Questions

I don't know about you but I'm getting tired of hearing about Pollyanna homeowners defaulting on subprime loans. Where was their adding and subtraction when they were signing the loans? Media coverage has ramped up recently to depict the average American homeowner struck between the eyes of big bad institutional lenders. But the truth is, nobody forced home buyers to sign loan documents and nobody twisted their arm to take on outsized obligations.

The American media would have you believe that the huge percentage of homeowners defaulting on teaser mortgages have been blindly struck from on high by the lending gods. But the reason the American dream is called just that is because it is more than ever outside of the sphere most Americans can afford. The reality is, subprime lending rules and target customers are exactly the kind of people who couldn't turn down the possibility of getting a house or property. But that doesn't mean they are legally off scot-free.

This means that individual lenders themselves are responsible for defaults. If loans targeting needy Borrowers were illegal, then half of all student loans would be illegal. If federal banking laws allow subprime homeowners to default on their home loans, is default on student loans and an equal assistance to forbearance for cash-strapped graduates next on the horizon? Student loan holders could make the same argument that subprime default Borrowers are crying to the press.

If you don't have savings and are living paycheck to paycheck, leaping into a portion of a million dollars obligation is NOT a good idea. This is not news. Borrowers are responsible for overseeing and getting information about their loans. But eagerness now passes for absolution in a falling market. Consumers now are coloring their tales as if they were picked off like ducks in a shooting gallery. Let's consider this imputation.