Home ownership not cheap, or someone elses obligation

Many homeowners, curled up in our recliners and soaking up primetime commercials, may have entertained the idea of calling the toll-free number for those subprime lenders that offer such low mortgage interest rates even to people with poor or no credit.

We look at our 6 point something interest rates and think 5-1/4 looks mighty good. Maybe we should switch, we think.

Probably not, as we are finding out.

The subprime market is tanking. These lenders are foreclosing with abandon on the people they lured into their money traps with the promise of cheap loans, easy payments and no qualms about how borrowers paid their debts in the past.

The problem is so significant that one of these lenders is knocking on bankruptcys door, and Congress is grilling industry executives like hotdogs at a housewarming barbecue. There is even talk of some government intervention to help people losing homes to foreclosure.

The latter is a bad idea.

We can support federal regulation of these lenders. Thus far, many have only been monitored by overburdened state banking and mortgage regulatory agencies that have not insisted on much accountability in truth in lending.

But we cannot support a bailout of either the lenders or borrowers.

If that happens, we know where the burden will be placed on the backs of people who struggle to pay their conventional mortgages and other obligations. They meet those installment payments diligently because doing otherwise would mean destroying their credit ratings. They are very careful themselves not to fall for schemes that sound too good to be true, which is why many of us in recliners seek out the remote control when the ads hit the airwaves.

Subprime lenders may have been important in helping a certain segment of the population achieve the American dream of home ownership. That dream, however, does not come true without the exercise of some responsibility, particularly financial accountability.

People who sought out subprime lenders for lower than conventional interest rates, or because they had bad credit reports, had, at a minimum, an obligation to read the small print. Said small print includes the likelihood that interest rates would jump at some point after the initial loan was approved. This print also stipulates borrowers considered to be credit risks do not qualify for all the financial benefits the advertisements tout. They get shifted to higher rates from the get-go.

For many people on the margins of financial security, the susceptibility to temptation is greater than their ability to meet their notes over the long term.

Taxpayers should not be required to subsidize, through their tax dollars, the dreams of others. That only lowers the standard of living for more people.