Mortgage Mess Democratic Meme

Democrats' meme on the mortgage market readjustment is big greedy CEO's taking advantage of poor working class people. Well, that may not be as accuate as Democrats would hope.

As usual, our friends on the left side of the aisle want to make this situation a story of good people and bad people, with poor working class folk being exploited by greedy CEOs of large companies. I'm willing to concede that in some cases, yes, perhaps some fast-talking lenders did mislead people, and didn't sufficiently explain that their adjustable rate mortgage could change. (That still doesn't excuse not reading the fine print.) But what has happened in many of these cases is that folks began to see buying houses as a way to get rich quick.

snip

(From the Washington Post: "It used to be that we would finance a loan up to $1 million with no down payment for a first-time home buyer," said Daniel H. Aminoff, a senior loan consultant at Washington Mutual Home Loans in Alexandria. "But as of March, we will only finance a loan of $417,000 with no down payment." A million dollar house, no down payment! Who are these people who have the income to make the payments on a million dollar house with a 30 year, fixed-rate mortgage (a $6,000 a month payment, by my back-of-the-envelope calculation) but who can't save any amount for a down payment?)

Not requiring verification of income and assets was always extremely risky.

A lot of people made their bets, and they lost. Trying to paint Fortress or subprime lending units as villains just isn't going to fly.

You cannot take such risks forever, particularly when the housing market starts to cool or when the supply dwindles. This is not going to be a particuarly good political issue for Democrats.