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The new divide: Who's to blame for the housing mess?

A new poll adds to the debate over what's right and fair.

By Karen Datko Apr 9, 2010 9:13AM

This post comes from Marilyn Lewis of MSN Money.


There’s a deep new divide in the U.S. right now, and it’s not over politics -- not the red vs. blue kind, anyway. It’s over who’s the victim and who’s the villain in the mortgage meltdown. 


A new survey, commissioned by Fannie Mae, the government agency that buys mortgages from lenders, shows that Americans are split nearly down the middle when asked whom to blame for the mortgage crisis.


The details aren’t out until Tuesday, but The Washington Post got an early look at the survey. The Post says that slightly more than half -- 53% -- blame homeowners, not mortgage lenders. The reasoning: Borrowers took out loans they could not afford. (The pollsters interviewed about 3,000 people, mostly homeowners, by phone in December 2009 and January of this year.)


So, we love watching Jimmy Stewart and the little guys whup Big Bankers in “It’s a Wonderful Life” (the flick is No. 10 on Time’s list of the all-time 100 best movies). But that’s the movies, this is real life, and we seem pretty clear on the difference. In real life, the Fannie Mae poll finds, 48% of Americans believe banks should foreclose on borrowers who can’t pay their mortgages.


The dead weight of debt

People surveyed were a bit more sympathetic when asked questions about homeowners who are in trouble because their loans are underwater (meaning that the property’s worth less than the mortgage). However, in that case, 88% said it’s wrong to walk away from the mortgage.

Here’s what’s amazing: Even 70% of people who said they were delinquent on their own mortgages thought that bailing on mortgage debt is unacceptable.

This should be comforting news for religious leaders, politicians and ordinary people who worry we’ve lost our way, morally. Don’t you think it demonstrates that Americans have a strong (putting it mildly) sense of what’s right, what’s fair and what’s not?


The survey asked other questions. It found, hardly surprising, a lot of disillusionment about homeownership. Is owning a home a safe investment? In 2003, 83% thought “yes.” Today, 70% think so. It is, when you stop and think about it, still quite an endorsement of property ownership, given the slide in property values all around us.

The survey also betrayed a dark cloud of worry over personal debt. More than a third of the homeowners interviewed said that they were worried they couldn’t pay all of their debts. Most said they hadn’t saved enough.


Goodbye Greatest Generation

And here’s something else that’s changing. Conventional wisdom, at least among the World War II generation, says to make your mortgage payment before anything else. Juggle the credit cards, the car loan, the groceries and whatever you have to, but make that house payment come hell or high water. Now, as other experts also are reporting, the Fannie Mae poll revealed that a large number -- a quarter of homeowners surveyed -- are ready to pay their car and credit card payments first.


The high emotions over who’s at fault in the housing crisis, who deserves help and who doesn’t deserve it, is one of -- maybe the hot button on the Internet at the moment. (Read “Is forgiving mortgage principal right?”) News stories on a government plan to subsidize banks for forgiving some homeowner mortgage debt can be counted on to provoke scorching opinions. See comments from readers of the Providence (R.I.) Journal about an article on the debt-forgiveness subject.


But there’s a case to be made that maybe we shouldn’t be totally hard on our neighbors in trouble. The Center for Responsible Lending blames lenders, too, for pushing higher-priced mortgages on borrowers. The Post story says:

The group (the center) has compiled data showing that most homeowners with subprime loans could have qualified for more traditional mortgages but were steered toward riskier and more expensive products by brokers who got paid more to do so.

What’s your feeling about this? Is owning a home safe any longer? Are bankers to blame for any of this mess? Or are we all solely responsible for our idiocy, even when we got a big dose of help from dishonest salespeople?


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