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Disgusting Borrowers, Lenders

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March 09, 2008 – Comments (2)

I am reading The Housing Bubble and I am finding a common theme, people who bought homes far ahead of the bubble, at affordable prices, are in trouble because of in increasing their borrowing.  For example, there is a story of a couple who bought a condo 8 years ago for $160k and now they owe $294k.  After 8 years of ownership you are supposed to owe less.

This theme comes up over and over again.  Seriously, when I worked in the bank back in 79 to 84 I can remember but one client pulling that kind of irresponsible garbage.  The rest were paying off their debts.

As for hardships, if you were facing a hardship the bank would consider reducing your payment to interest only.  Over and over people with reduced ability to pay due to some hardship have been increasing their debt burden.

You don't get here without both borrowers and lenders being irresponsible.

Right about now I am disgusted with the level of irresponsible spending. 

And, I am wondering about the guy I met in Costa Rica that worked in a warehouse and all the places he'd visited, describing a couple vacations per year, how much easier he was about spending, spending about 3 times as much as I was spending.  He blew what I was spending in a week on two nights in an expensive hotel.  He was generous to a fault with the people he stayed with for the week in the Spanish school, taking them all out to dinner regularly.  He worked in a warehouse driving a forklift. 

Now I really wonder about the people I have met over the years where I can't understand how they could afford the things they were buying.  Right about now I doubt that they could afford what they were buying and I suspect far too often I am reading their pity potty stories daily as they lose their homes. 

2 Comments – Post Your Own

#1) On March 09, 2008 at 8:21 PM, DemonDoug (80.09) wrote:

I am the biggest housing bubble blog reading whore there is.  They have highlighted many egregious examples, the worst of which I can remember is the strawberry picker in Oxnard making 15k/year who bought a 714k home.  Many many many other examples of people making not enough money buying overvalued homes for way more than they could afford.

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#2) On March 09, 2008 at 8:45 PM, wolfhounds (28.96) wrote:

I agree with both of you, and I get my daily dose of bubble stories from the IBD website. I should be flabbergasted at bank's lending policies these last few years (having worked for one also), but greed has no limits on borrowers or lenders this time around. They'll all pay the piper, taking unintended victems with them.

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