JLP of All Financial Matters had a six-question interview on the housing crisis with reality TV host, speaker, and author Larry Winget. Mr. Winget hosts the A&E show Big Spender and has written several books on personal finance, the latest of which is You’re Broke Because You Want to Be.
Mr. Winget maintains that the blame for the massive foreclosure flood rests on the borrowers:
I think the primary cause of the crisis is that people were irresponsible and bought more house than they could afford. Money was easy to get and they took it and didn’t give much thought to the FACTS. And the facts were that their mortgage was going to go up at some point. “But no one told me that!” Bull. It was in the paperwork. If you didn’t read it or understand it, that is your own fault.
Here he’s referring to adjustable-rate mortgages. Harsh words, but that’s his style, and I think he’s largely right. (This isn’t the story you’ll hear from prominent political leaders, because it’s just about guaranteed to turn off voters. It’s much more palatable to believe that it’s someone else’s fault.) Buying a house is definitely something where the timing can be controlled. The prospective buyer can sign the contract or not. The buyer can look for affordable houses with a low, fixed-rate payment or an unaffordable house with payments that are low now, but which rise far beyond their ability to pay later.