It's no shock that our country is in an enormous financial crisis, but how did we actually get to this point? Two moms face off.
1. Banks lent money (mortgages) to borrowers that were not qualified to purchase homes. Banks didn't worry about these unqualified buyers, because home values were going up up up.
2. These non-qualified borrowers began to default on these loans -- unable to afford the payments. They were forced to sell these home,s resulting in an over-saturation of the real estate market.
3. These mortgages were investments of the banks and because of the down market, their investment value went down -- hurting the financial stability of the banks.
4. Banks were forced to stop lending and had to raise money from the private sector to cover their debt.
5. The situation went from bad to worse. Banks eventually couldn't raise money anymore and investors lost confidence in the banks.
So whose fault is it, the government of the homeowners? Should the government be bailing these homeowners out? Two moms face off on this heated issue.
Mom Julie: It's the government's fault.
It is the government's fault we're in this mess. They allowed the banks to give loans to people they knew couldn't afford them. They didn't require mortgage companies to do proper credit checks or ask for proof of income. The government allowed Freddie Mac and Fannie Mae to make loans that no experienced mortgage lender would have made without government insurance. They offered risky sub-prime loans and adjustable-rate mortgages that set people up to fail. What did they THINK was gonna happen? But they didn't care that our economy would soon go in the crapper. All they thought about was lining their own pockets. They sold us all a bill of goods that "anyone could afford the American dream." Blaming the homeowners is not the answer. These people shouldn't have been allowed to borrow the damn money in the first place!
Mom Melissa: It's the homeowners' fault
Call me a bitch if you want but I'll tell you why I'm against the bailout. I am against the $700 BILLION DOLLAR bailout because I don't think that responsible Americans should have to pay for the greed and stupidity of others (mainly bankers, homebuyers, flippers and mortgage brokers) One of the reason that we are in this mess is because (greedy) Americans took out loans that they had no business accepting (or even applying for in the first place.) What makes people think that if they make $5000 a month, they can live in a million dollar home? Sure, I'd love to live in a fancy, fully-renovated house in the best part of town but I can't. Why? Because my husband and I don't make enough money, and we know that so when we bought a house three years ago we bought a shack. We bought our shack because it was what we could afford!! So, why should my family pay so that others could live a lifestyle that they can't afford? To be honest, I really do feel bad for the children of the people who took out these loans and then subsequently lost their homes. But, I have to tell you, I'm not sad for them because they're living in a two bedroom apartment now (something their parents can actually afford!). I'm sad for them because their parents are greedy AND stupid and are going to cost the rest of us A LOT of money and possibly change the way WE live. Thanks a lot.