If it’s any consolation, there are a lot of people who HAVEN’T forgotten about personal responsibility and who HAVEN’T gotten themselves in too deep. The 70% of buyers who used these toxic financing options in the 2003-2006 period does include a small percentage of individuals for whom that really was a reasonable option, as well as some folks who are both willing and able to live with their mistakes. These people are not part of the problem.
There is no financial literacy test for obtaining a mortgage, and if there was a lot of people, including some who are very responsible, would flunk it. Like it or not, some people have to rely on getting good advice from their professional service providers.
Suffice it to say that the maxim – you can’t cheat an honest man – is true for the most part. But’s it’s also true that securities brokers can’t get away with doing some of the things our realty brokers, mortgage lenders and appraisers have been doing for the last few years. There is an element of the public interest involved, above and beyond the personal accountability aspect of this problem.