When a bank forecloses on a home, who is to blame?

[ecstatic]

Should certain risky buyers be shut out of the process? What about the risky buyers who end up fulfilling their obligations?


Who is to blame when a bank forecloses on a home?

Edited for clarity (hopefully).

[FSogol]

1. Other: Combination of the first 2

Although there are times when it is definitely 100% the fault of 1 or 2. (If that makes sense)

[Commie Pinko Dirtbag]

16. I daresay combination of the first THREE

After all, it DOES happen that a buyer finances something entirely within his means and then his job goes kablooie.

[Orrex]

2. Does the homeowner foreclose?

I thought that the lender was the one who foreclosed?

(Of course, I could readily be mistaken...)

[louis-t]

15. Lender forecloses.

But we knew what he meant.

[Orrex]

18. Sure... *You* understood, but did I?

Really, that's the central issue IMO!

:evilgrin:

[wryter2000]

3. Other

It could be any number of things, including no one was at fault but the buyer fell on bad times and couldn't make the payments that were very reasonable and rational when the load was made.

[LSparkle]

4. I agree

People can be totally wiped out by a medical emergency or if one-half of a couple loses their job and can't find another that pays as well (VERY common these days).

[BlooInBloo]

5. When a questioner doesn't understand the concepts well enough to ask a well-formed question....

.... Who is to blame?

:rofl:

[ecstatic]

13. And what is a more acceptable way of asking the question?

LOL. Enlighten me.

[DemocratSinceBirth]

20. Your Poll Would Be Fine If You Had A Option 3 Which Would Mean It's A Combination Of One And Two

Some borrowers and lenders were willfully blind...

[BlooInBloo]

21. It's not about "acceptable", or "preference", or any such thing. It's about simple...

.... conceptual grammar. But you got it from somebody's tip-off. Congratulations on asking a coherent question.

[DS1]

6. GEORGE W. BOOOSH!

[wryter2000]

22. Oddly enough, I agree

Usually, blaming Boosh for everything is kind of silly, but in this case, just about everything that's causing the problem emanates from him or the Republican party. That includes lack of health insurance that can cripple people with one major illness and outsourcing jobs that can also cripple people. Include the Republican bankruptcy bill (which, sadly many Dems voted for) and the greed of subprime lenders, and you have most of the reasons for the foreclosures.

[Squatch]

7. Caveat Emptor

[question everything]

8. Other, if the details of the loan were not explained

to the borrower or, worse, were misleading.

Not every borrower is a financial expert and, as most of us who purchased a house know, one is faced with a ton of paperwork in legalese.

There were many unscrupulous brokers who got into the market and enticed people, including seniors, who did not understand the details.

I consider myself finance literate and almost got entangled when the first, proposed, Truth in Lending was OK but the final one revealed the real story. I canceled the application, complained to the CA Dept. of Real Estate that barely gave the broker a slap on the wrist..

[phantom power]

9. Other: Credit/mortage industry deregulation is what enabled our current fiasco.

That particular blame is shared by the industry, which lobbied for its own deregulation, and Congress, who allowed it to happen.

[BlackVelvet04]

10. Wow....

look at how quick the homeowners get blamed. When we bought the lenders tried to talk us into all kinds of creative financing but we said no thanks and went with a fixed rate mortgage. They certainly can make adjustable rate mortgages sound easy and safe. This wasn't my first rodeo so I didn't bite but what about the gullible and naive?

I think there is plenty of blame to go around....poor job market; higher gas, utility, food, etc. prices putting the squeeze on; unscrupulous lenders; unscrupulous real estate agents and greedy home buyers.

[no_hypocrisy]

11. I did a closing last year for a nice young couple about to get married.

They were buying a house by a lake and it was the literal Money Pit and Mr. Blanding's Dream House (the "before" version) rolled into one. It was overpriced and I knew they would more or less spend the purchase price to make it habitable. (It failed 3/4 of the home inspection. Their own realtor tried to talk them out of the deal.) I begged them to keep returning to the calculator to be sure they could afford the mortgage, the property taxes (NJ is skyhigh), and rehabilitation. They bought it anyway.

They still have the house and aren't bankrupt, but I had ulcers thinking about their sale. I felt like a "mom".

My point: The mortgage company doesn't care if you live in a shack as long as you pay them. The realtor and I were the only ones duly concerned whether the kids could afford to buy that particular house.

[BuyingThyme]

12. It depends.

[beberocks]

14. I think both the borrower and lender are to blame

Too many home buyers around here (Sonoma County) thought that real estate was a sure-fire investment and would pay anything for a house. They didn't read or bother to understand the loan they were signing up for. The lenders got even greedier and would let almost anybody borrow huge loans (no income verification required) because they never thought the real estate values would go down. Both are to blame for this mess, but it is the borrower who (willingly) signed the loan documents so they deserve more of the blame. I'm seeing lots of foreclosures for loans anywhere from $400K to over $1 million, and most of the homes are going back to the bank since there is little or no equity left in the property.

[SteppingRazor]

17. Completely varies on a case by case basis.

Sure, in one instance, some idiot might have taken out a mortgage that they knew they couldn't pay. But in another, it could be taking out a mortgage, followed by getting laid off and then having a lengthy hospital stay.

[Speck Tater]

19. Other, but it's not so simple...

First we have an educational system that turns out high school graduates with no understanding of how to manage their finances, and so much mathematical illiteracy that they don't understand even the most basic concepts of percentages and interest rates.

Second we have a regulatory environment that favors allowing business to mislead customers and hide vital information from them all in the name of making the sale. Profit is our god.

Third, we have people, who not only were ill-prepared by their educational institutions, but took no personal responsibility for educating themselves.

Fourth, we have raised our people and conditioned them not to question authority or "the experts". These "leaders" know what they're talking about so I don't need to worry. "My doctor is all-knowing. He couldn't possibly be wrong." "The loan people are experts. They wouldn't mislead me."

[Donnachaidh]

24. Ding Ding Ding!

We have a WINNER! :bounce:

[rosesaylavee]

23. The Lenders...

I have worked closely with bankers for the last two years. It is my opinion that bankers were aware they were offering deals that were high risk and they made a lot of money doing so.

Greed on their part overrules the willing ignorance of the homeowners that fell for these deals.

Bankers - bleh. Some are honorable, but overall, I don't trust them.