It was in the name of “fairness” to low-income Americans and those with poor credit that Congress pressured banks in recent decades to relax lending standards for home mortgages.
But decide for yourself how “fair” that wound up being to the people who were to be helped by easier credit.
A foreclosure listing service, RealtyTrac Inc., has released data showing that this year alone, more than 1 million U.S. households – representing several million individuals – will lose their homes to foreclosure. (There are usually only about 100,000 foreclosures per year.)
Of course, not all of the borrowers who are losing their homes this year were poor credit risks. Some were gainfully employed and took out loans that were reasonable, given their income. Some had the misfortune, however, to lose their jobs, and then they fell behind on their payments.
But in too many cases, the homes being foreclosed were purchased by people who got far larger loans – and a lot more house – than their income and credit history justified. Often, they also got adjustable-rate mortgages whose rates were “adjusted” upward, eventually making their payments unaffordable.
There were many warnings that the looser lending standards were setting up millions of Americans for foreclosure, but those warnings went unheeded in Washington. Now, as lots of people are suffering the pain of foreclosure because of bad policies pushed by Congress, we doubt many of them think that is very “fair.”