Subprime blame game

Some 2.4 million homeowners are in danger of losing their homes, many because of bad subprime loans. Critics are pointing their fingers at who is responsible - here are the main targets.

Readers write in:
Borrowers are to blame!
Our original blame-game story only mentioned the responsibilities of borrowers in passing. That we did not devote a full page to borrowers rightfully provoked much comment from readers. They charge that those now in trouble were trying to get something (a nice home) for nothing (no saving for a down payment, no worrying about monthly payments).

E. Pong wrote, "Your article leaves out the most critical culprit, the HOME BUYER!! Why does the main-stream media paint them as mindless victims? They certainly did their share of neglect and greed by buying homes, cars, furniture they couldn't afford! It's time for people to start realizing they are personally responsible for their actions."

Greg Beitel wrote, " Even as a liberal democrat I am stunned that the list of entities responsible for the subprime lending crisis does not include the borrowers who signed up for the mortgages. In the end, they are responsible for deciding that they could afford the mortgage and signing the papers. No one forced them to take on a loan the couldn't afford."

From another reader: "The Blame Game story about the rise in foreclosures omitted a very culpable participant, the borrower. Too many borrowers were victims of their own greed, sometimes willingly participating in the misrepresentation of their qualifications and at other times accepting risks when they were unprepared to accept the consequences."

A. Seibert wrote: "Yes, many people were improperly tempted by easier and bigger loans, but in the end, it's their responsibility to look after their own behinds, get educated about things, and make their own decision that is right for them."

Jason Savage wrote in to pinpoint a particular reason to blame borrowers: "A significant percentage of stated or no income borrowers inflated their income to qualify for certain loans. Borrowers with Hybrid loans either knowingly or unknowingly accepted the risk of future payment shock. Some took a gamble and lost."

In their defense, however, it must be pointed out that many borrowers were drawn into making untrue income or assets claims by unscrupulous brokers. Some borrowers report getting their loan applications back and seeing that their incomes had been widely inflated.

Still, many readers expressed their beliefs in good, solid American virtues of personal responsibility and rugged individualism. Wrote K. Saylor: "I am afraid that the weak minded conclusions you espoused in this article is leading it to become, 'America - Home of the incompetent and irresponsible.'"

Bottom line: There's certainly lots of responsibility here, especially for the borrowers who were less than honest about their finances. Others can be blamed for not being more pro-active or diligent about obtaining the right kind of loan for themselves. It's also true, however, that consumers tend to be very naive about home buying; very few of us do it more than every 10 years or so. It's a complicated transaction that many are not really up to and they rely on industry professionals to guide them though it.

Mortgage brokers

Appraisers

Regulators

Lenders

Wall Street

Agents

Borrowers
Now more than ever it pays to be a prime borrower - here's how to be that guy. (more)
Housing activists say families that have mortgages with questionable terms should be given six months to work out deals. (more)

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.