Treasury Secretary Henry Paulson recently "blamed the current credit crisis on several factions in the market, including loan brokers, rating agencies, Wall Street securitizers, and even regulators. " (National Mortgage News 3/14/08).  It appears to me that the secretary missed one of the biggest "blamees" in this situation - the mortgagee. 

Now, don't get me wrong - I feel badly for those folks who are in trouble because of mortgage issues.  The company I worked for at the beginning of last year had to fold because of market conditions and I currently work as an independent mortgage originator for a former competitor.  The reduction in income put a strain on my family's cash flow as well, and yes, mortgage payments were tougher to make because of it.  But we made the mortgage our priority and, thankfully, were able to make the payments.  This was possible because did not try to buy a house that stretched our budget to the maximum allowed by lenders.  It was our decision as consumers buying during the "best of times" (Summer 2005) for the mortgage industry.

Now I know a lot of folks took mortgages recommended by their brokers at high debt ratios, and I know that they did so on adjustable mortgages with reset rates that are causing lots of problems, and I know a good salesman can "sell ice to Eskimos;" but it is that mortgagee who signed the note for the loan at a title company, attorney's office, or settlement agency - all of whom put a piece of paper in the hand of the customer with the rate, payment, and terms of adjustment written on it.  Sure they were excited to become home owners, but buying a house is not an impulse buy - there is plenty of time between deciding on a house and closing.  A good broker (and I can hear the nay sayers now) will have told the customer what the payments were initially and what they would become upon adjustment (and RESPA's Truth In Lending statement had the numbers on it at closing).

Yes, there were bad brokers and Realtors (r) as well as bad closing agents and bad lenders; but the final responsibility for the loan is the person who signed accepting it.  Just about every lender I worked with (and there were a lot of them) sent a pre-closing package containing copies of the documents that would be signed at close.  I had very few of my customers call with questions about the numbers presented.  Neither the lender nor the broker can make the customer read these materials.  To paraphrase the old chestnut; They led the horse to water, but it was up to the horse to drink!  Grown ups make decisions every day - when they make bad ones they need to be prepared to take their share of any blame attached.

There is plenty of blame in this situation to go around, but Mr. Secretary Paulson - let's not forget to spread it evenly to all who have earned it.