A recent hot topic related to the housing crisis is the FORECLOSURE crisis. If you have read my previous posts, you would know that there are many houses that are currently in foreclosure.
Just to refresh your mind in case you forgot, foreclosure is when a person that lives in a house paying mortgage can no longer pay their mortgage (due to unemployment, loss of money, etc.) and so then the person is evicted, their rights and ownership of the house is taken away, and the bank or government possesses the property, usually auctioning the goods and furniture in it, and then selling it on the market typically for a much lower price than it was originally worth.
Anyways, the current crisis revolves around the fact that it was recently discovered that many buyers were given subprime loans very freely. The process to get loans for buying a house are supposed to be extremely hard and complicated. However, during the time of the housing boom and the expansion of the bubble, many firms, banks, and financial institutions gave out loans very leisurely and freely. Current investigations have revealed that the process was much easier, and even in many instances, racist in that people of certain races and socioeconomic classes were given harder to pay back subprime loans which in many ways is a setup for failure.
Based on this information, and this article, what do you think? Do you think financial institutions were greedy and racist or careless and shallow in their dealing with giving out subprime loans?
That is a very interesting question and I’m right on the fence. I don’t like being on the fence but I can’t seem to make up my mind. On one side, the home buyer should have been keener about the specifics of the loan and should be able to tell if the loan was a scam or not. However, on the other hand the banks were some cheeky little devils by purposely picking on people and extremely racist by only picking on the minorities. Either way it was a bad deal and someone should have stopped it, morally the banks should of but the banks’ business is to make money no matter what so I wouldn’t expect them to help out. I think the whole situation is very un-American in a sense, like the corporations screwing over the small guys, but in a way it is typical America; corporations have always picked on the smalls guys and capitalism is a dog-eat-dog world so who knows. I’ll keep thinking about it cause I really don’t like fences but I’m currently on two.
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