Monday, July 28, 2008

Dreaming The American Dream

The anguish of foreclosure

The woman in the above-linked article found her home in foreclosure and unable to handle the situation she committed suicide.

She made some bad choices. The worst decision she made is that she mismanaged her household finances and allegedly deceived her husband about the status of their mortgage.

Committing suicide did not save her home.

I have seen discussions around the Internet that the woman's choices were her own, and that she made her bed and therefore should sleep in it.

She has. Permanently.

I do not excuse her mismanagement of her money, nor do I excuse the alleged deceit of her family. She made bad choices.

The matter at hand, however, is not her bad choices.

The matter at hand is the fact that the deregulated financial industry has changed the rules of the home-mortgage game, leaving millions of American families in dire financial straits.

America expanded after World War Two because the federal government backed conventional home mortgages, ensuring that American would be able to purchase a home and become part of the American dream and full participants in the American economy.

With those federally guaranteed mortgages came federal regulation of the financial industry to ensure there would be banks making loans that Americans could afford.

Thirty-odd years after the advent of the American suburb and the success of the home-mortgage industry, Ronald Reagan brought forth the notion that a deregulated financial industry would provide a better economic condition, Bill Clinton agreed with him and the two of them gutted the American Dream within twenty years.

Federally-funded mortgages should be conventional thirty year mortgages, not balloon notes or adjustable-rate mortgages. An American family should be able to secure a conventional mortgage without having to worry if their credit rating is a point below some arbitrary number deemed acceptable by a private corporation.

The American Dream is a now a nightmare for most families. I heard a prediction this morning that within two years, five million more homes will be lost to foreclosure because the mortgages are non-conventional, adjustable-rate mortgages.

This makes no sense.

We ought to be ashamed of ourselves.

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