The McMansion Extra Value Package : Is it REALLY the Bank's Fault You Can't Afford Your Home Now?

Big Macs don't make you fat. French fries and 32 oz Cola makes you fat.

:)

Every one has some responsibility for this mess, including consumers and our buy now and pay later culture. 

It is sad to think there are still professionals out there who believe consumers caused the housing crisis. Legislation that allowed banks to AAA rate their own loans, govt agencies like Fannie and Freddie that jumped on the packaged loan bandwagon too offering junk loans, Wall Street and big banks with their hands in politicians back pocket the entire time. And yet still we blame the average America!?

There was so much that went wrong, but the least of which was a buyer who bought a bigger house than they really needed. Of course there are always going to be people who take advantage of an opportunity to make a buck (it happens always-even right now) . But the majority of those people who bought during the peak did so to better their circumstance or simply invest in their future. I had very savvy yet conservative investors buy and lose money over those years. All kinds of people lost money and/or are losing their homes.

It is a dangerous thing in our business to blame the consumer.  Personally I think we need to focus on our own government. They are STILL doing things that are destroying our financial future.  Ultimately we need to educate ourselves and protect our own finances because if I have learned anything from this crisis it is our govt will not protect our personal wealth.

Love this post... I'm sorry  but I didn't read all of the above comments, there are so many, so forgive me if I repeat.  I used to be Executive Director of a group called Citizens Against Lawsuit Abuse.  So, did you know there were actually two girls who DID try to sue McDonalds because they got fat eatng the food?

And I think you got it right on the head:  we NEED to go back to the times when we actually TOOK responsibility for our actions honestly.  Now it seems like we all play the "blame game".

As soon as I saw "McMansion" in the title, I knew you had to be a NoVA agent.  We sure had plenty of them spring up in Ashburn/Leesburg and beyond.

I disagree completely. 

The home buyer is not the expert.  The members of the real estate industry are.  The agent, the loan officer, the lender, the government entity that established the lending guidelines and the underwriters who follow them are the experts.

If the consumer is such an expert, why do agent believe that they have to send the new buyer to a loan officer to get pre-qualified or pre-approved?  Why not just take their word for their ability to get a loan. 

HA! 

Chris Ann, 

Excellent post.  We are all completely responsible for our own financial health.  Items can have an impact on this, such as home prices falling rapidly or dramatically.  However, way too many folks think it is ok to be very high in debt with no savings.  

I drive a 10 year old car.  I could have gotten a new one year 2 or 3.  I CHOSE not to, as I wanted to put money away and live well within my means.   Yes, my home value is down.  I have investment properties whose values are down.  Because I did not CHOSE to have a high debt value on them, we are good!  

I am off to buy a new car any day now, when I figure out which one I will enjoy for the NEXT 10 years.  Living well within your means is so critical and we are trying hard to teach our children that.  

(Just had a conversation with one of them about why they couldn't have an iPhone? - Does a young teen need a phone with a $45 data plan - that's $540 a year... in my family the answer is NO! - Ah, evil parent at it again!)

All the best, Michelle

At the top of the bubble the perception was that the homebuyer was going to have to take the plunge and pay too much and borrow too much or risk being left behind.

Buyers made offers and lost the deal to a more aggessive bidder. After two or three of those they just threw up their hands and bid higher than they should have -- as it turned out.

After all, if things went badly the problem could always be solved by putting a for sale sign in the yard.

But it turned out that those who borrowed the maximum amounts they could get were the smart ones. When prices went down it was the banks that lost money thru the short sale or foreclosure process.

Those who put 30, 40, 50% down lost their own money! And those who had no mortgage at all lost the most. (Just because you did not have to sell does not mean you did not lose part of your net worth.)

Blame the recession. When someone loses his income he may not be able to afford his home.

To some extent, we all share the blame and we all need to be involved in the solution.  Our fathers and grandfathers (mothers and grandmothers) did it after the great depression and so can we!

Chris this is ironic in that I downloaded Dave Ramsey's Total Money Makeover a few weeks ago and just really began reading it yesterday.  Generational thinking keeps people hanging on to old ways of so called living and living on credit is one of those ways.

Far to0 many people who fell for the supposed benefits of the interest only loan really did not understand the concept itself.  Not only that, there are many people who thought they were getting a good deal just like Tni said.

I understand where you are coming from and I agree that those who knew better should have done better, but what about those who didn't and still don't know any better.  These people do exist.

THANK YOU, THANK YOU, THANK YOU!  It's so refreshing to have someone preaching personal responsibility again.  If we continue to blame Wall Street, banks, government, etc for our problems, then we have to rely on them for our solution as well.  We determine our destiny, and if we sow bad seed, we reap bad fruit. 

And yes, there are people even suing McDonald's for making them fat.  It's unbelievable!