> Why is there never any blame put on those on "main street" who took the loans that they couldn't repay?
While I agree that people should have known better, I still blame the mortgage brokers, banks and realtors. The average American barely has the math skills for "12*12=144". There's a principal-agent issue here in my mind. The average American thought that the broker/bank wouldn't offer a clearly unpayable loan, because they would lose money on it. Not to mention that they don't look like sketchy auto body shops or something, but they look like legitimate businesses. So when this guy who's clearly a mortgage/finance expert says "Great news, because of assorted financial wizardry that's WAY, WAY over your head, we can put you in your dream home for about what you're paying in rent right now", people are going to believe him, because (a) they're primed to trust this guy, and (b) they badly want it to be true. There's a lot of resemblance to a con in that way. To add to this, Joe Schmoe is seeing his coworkers, friends, and neighbors getting into these deals as well - it can't be a trick if everyone's doing it, right? Not to mention that I've read standard MERs mortgage documents, and they are ludicrously opaque. So while I agree that "main street" people screwed up and should shoulder some blame, I can certainly see their perspective.
While I agree that people should have known better, I still blame the mortgage brokers, banks and realtors. The average American barely has the math skills for "12*12=144". There's a principal-agent issue here in my mind. The average American thought that the broker/bank wouldn't offer a clearly unpayable loan, because they would lose money on it. Not to mention that they don't look like sketchy auto body shops or something, but they look like legitimate businesses. So when this guy who's clearly a mortgage/finance expert says "Great news, because of assorted financial wizardry that's WAY, WAY over your head, we can put you in your dream home for about what you're paying in rent right now", people are going to believe him, because (a) they're primed to trust this guy, and (b) they badly want it to be true. There's a lot of resemblance to a con in that way. To add to this, Joe Schmoe is seeing his coworkers, friends, and neighbors getting into these deals as well - it can't be a trick if everyone's doing it, right? Not to mention that I've read standard MERs mortgage documents, and they are ludicrously opaque. So while I agree that "main street" people screwed up and should shoulder some blame, I can certainly see their perspective.