Friday, August 31, 2007

Just Who is Responsible?

Yesterday I was reading an article in the Wall Street Journal about Utility Companies closing down local offices, in favor of on-line customer service centers. No longer can you walk into their office to pay your utility bill, but must do so on-line. But what happens if there is a computer glitch and your payment isn't processed? Well, some utilities are "employing" the help of cash checking stores for customers to hand deliver their payment to.

The big scandal about all of this is that customers taking this route are also being lured into taking out high interest rate loans at these very same check cashing locations. Seems they just can't say "no" once they get in the door. Their solution? Complain to the Utility Company that they are unfairly being targeted by these instant loan companies because they "have" to pay their electricity bill there.

Let me get this straight. These people are blaming the power company for having no self-control? It is suddenly the companies fault for adults not being able to say NO? It you don't have the money now, then don't take out a loan against your next paycheck, it is as simple as that. But in today's society, personal responsibility no longer exists.

Take a look at the mortgage "crisis" happening today in all the headlines. For the most part, the entire blame is being heaped on the lenders. Sure some might have supplied loans to those that really never should have been approved, but geez, who really are the ones that should be wondering why they are in foreclosure?

Many of the real estate foreclosures, which Minneapolis is not immune to having, are the result of people not being honest with their current financial situation. In the need to keep up with the Jones's, people overextended themselves without thinking about what they were doing. All they cared about was reporting to friends and family that they, too, had just bought a home, or that they had just bought a house to "flip" and make millions of dollars on. Unfortunately, people forgot that real estate is not a commodity.

These same people then took out home equity loans to furnish this new lifestyle. Oh, and let's not forget that many also took out adjustable rate mortgages. They knew they could not afford the mortgage in three years, but were hoping that they would get that job promotion, which would make it possible. Like I said, not being realistic with their financial situation.

Now I know that not every person in foreclosure fits into this category. Sometimes things happen you cannot control. Like when the home we were rehabbing got hit by a hurricane and selling it became a nightmare. We were months away from foreclosure, but we knew that is was our responsibility. We had made some bad choices along the way that got us to that point, so in the long run, our situation was nobody's fault but our own.

Owning a home is a right, but it is also a privilege. It is a responsibility that should not be entered into lightly. If you cannot take care of a home, then don't buy one. Stay in your rental and let the leasing office take care of maintenance. Raise the 10% down you will need to put on the home. You will be amazed at the discipline it takes to put away money that you cannot use. If you find yourself facing foreclosure, take responsibility for your actions. Blaming the lenders and demanding the government bail you out, is not the trait of a responsible individual.

Yes, this is sort of a rant. I guess I am just tired of people in our society not taking responsibility for their own actions. It takes two to close a loan, the lender and your signature. So instead of seeking new legislation to stop defaults, why not stop underwriting loans for people who have no business buying a home (at least 100% ones). The free market will fix this, not some men in Congress.

0 comments: