Originally Posted by nuttyjoe

A good post, H80; but there is enough-more than enough- blame to spread around for the housing crisis. I do not believe we can penalize a builder for putting up new homes or developments. Part of their problems was that they did not do good research to build homes within the median income level of the area that they built in.For example: why would you build $1,000,000 homes say, on the south side of Chicago- or just off of Crenshaw Boulevard in South Central Los Angeles? Not a smart investment; I say. But not an illegal one.
Now, do banks and mortgage companies shoulder some blame also? Without a doubt. There are many people who have been steered into mortgages with extrememly high payments and harsh terms of repayment including those nasty adjustable rates. But I've not yet heard of a bank or mortgage company putting a gun to anyone's head to make them agree to these terms. They must be held to a standard that mortgage applications cannot even be submitted if the applicant's debt-to income ratio is over say, 33%.
So what can we do right now to ease the problems going on now? For starters, I would propose a forebearance for those whom are in "pre-foreclosure". If one has just fallen behind in their payments recently, and is just trying to get caught up; taking the past due amount and putting it back on the end of the loan will help the homeowner-without punishing the original lender. This forebearance would favor those whom have incomes freom employment or otherwise, and also allow time for others to sell their homes, or trade down to something more affordable if necessary before losing them on the "courthouse steps". But it keeps the money in the housing market.
Another thing I have suggested is the total abolishment of Adjustable Rate Mortgages. These instruments serve no good to anybody, as they allow one to think that their mortgage payments can be reduced. In actuality, they rarely, if ever; have. Simply, these payments have either stayed the same or risen (most likely).
I still point to financial education for the American public. Too many have not the slightest clue as to the basic financial knowledge needed in order to survive.