During the great housing boom, homeowners nationwide borrowed a trillion dollars from banks, using the soaring value of their houses as security. Now the money has been spent and struggling borrowers are unable or unwilling to pay it back. …
Lenders say they are trying to recover some of that money but their success has been limited, in part because so many borrowers threaten bankruptcy and because the value of the homes, the collateral backing the loans, has often disappeared.
The result is one of the paradoxes of the recession: the more money you borrowed, the less likely you will have to pay up. …
…the borrowers argue that they are simply rebuilding their ravaged lives. Many also say that the banks were predatory, or at least indiscriminate, in making loans, and nevertheless were bailed out by the federal government. Finally, they point to their trump card: they say will declare bankruptcy if a settlement is not on favorable terms.
Ah, yes, it’s the increasingly American way: I’m a victim so I’m not responsible. Although “the federal government” bailed out the banks, all of us are on the hook for it in terms of higher taxes and greater national debt down the road.
This is part of the reason I was and am still opposed to the panicked bailouts of 2008. They essentially rewarded irresponsibility by lenders, borrowers and the government (i.e., Fannie and Freddie). And now human nature makes its natural response: If my poor decisions are going to be covered by the rest of society, I’ll just keep shirking responsibility. How does the administration respond? More handouts. All of this because somewhere along the way, it was decided that increasing home ownership was a governmental responsibility.