Recently, the federal government announced a $25 billion settlement by the nation’s top five banks with current and former mortgagers. The funds will be paid to some current borrowers whose mortgages are now underwater, and to some who were foreclosed on and are now out of their homes. The government forced this settlement because those banks supposedly used unethical tactics when signing those people up for their mortgages and/or when they foreclosed on them.
Be it as is might, I don’t think the banks owe these people anything. The people who took out these mortgages were not babies, they were adults. The banks didn’t force any of them to accept a mortgage, and they were not the cause of anyone being late on their mortgage payments. In fact, this settlement rewards irresponsible behavior.
A responsible person would not overextend his or her finances by purchasing the most expensive home that he or she could qualify for. But that’s exactly what the majority of the settlement recipients did. A responsible person would have money put away in case of a job loss or other unforeseen emergency. But the majority of the settlement recipients did not do this.
Most of them bought their homes with the intent to use them as ATMs and with the assumption that the housing market would continue to expand, despite all the warnings and tell-tale indicators to the contrary. They have no one to blame but themselves, and they alone should have to deal with the consequences. Fortunately, most of them will get nothing from this settlement, and those who do won’t get a whole lot. Responsible people can take heart.
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