The Subprime Mortgage Crisis

The recent subprime mortgage crisis in the United States had a devastating impact not only on the economy of the United States, but also on an international level. The only way that many of those who were involved can accept the crisis and their losses is to be able to put someone at fault, which poses the question, who is to blame? This question cannot be answered simply, and involves many complications which have been researched, examined and debated over the years to try to come up with some answers. The only substantial answer that has been formulated is that everyone that was involved in any way is to blame, each for their own reasons. The two main parties involved include the lenders (mortgage companies) and the borrowers (potential homeowners). Mortgage brokers and the US Government also played a part in the way the crisis unfolded, but fell somewhere in the middle. I personally agree that each of these four groups is, in a way, at fault.

Borrowers are often seen as the victims, as they were deceived into buying loans that they could not afford, and were then forced to default on their mortgages. What most people do not know is that they are also responsible for deceiving the mortgage companies in return. When attempting to purchase a mortgage, an individual must complete forms containing information about themselves and their family, their economic history, and other information that would help to determine what kind of mortgage they might qualify for. It is fairly common for an individual attempting to purchase a mortgage to fabricate their financial situation in order to qualify for the mortgage they want. Borrowers will sometimes also seek the help of a mortgage broker to guide them in the right direction regarding their mortgage choice, but many people misunderstand what the job of a broker really is. A broker works for a mortgage company and are expected to market on behalf of that company, comparable to a salesman working for a specific company to sell a product. They have no legal obligation to act or make decisions in the best interest of their customer. It is the borrower’s responsibility to understand the policies associated with a mortgage and to be prepared enough to make an informed decision through research, experience, and asking questions. They should not rely on the broker to make the decision for them. Borrowers must take the initiative to educate themselves before trusting someone else to make important financial decisions for them.

On the other side of the spectrum are the lenders, the mortgage companies. Their situation is very different, as they often have the stereotype of being greedy Wall Street big shots that only care about themselves. Unfortunately, most people would agree that this is the truth. Lenders, for the most part, create a living off of trying to manipulate others. They hire mortgage brokers to do their dirty work so they do not have to directly come into contact with those who