CA Renter, I’d be very happy with the lenders failing. And you’re right, if that were allowed to occur, then lenders would get more careful, and we’d avoid the next bubble.
We could solve this problem with even one of these possible actions:
1. Let lenders fail
2. Require borrowers to repay
3. Require minimum 20% downpayments in all cases
There are probably more options, but these will do. Unfortunately, none of these actions will be taken.
I still think that borrowers should be responsible for their loans (and lenders too). I can’t imagine letting other people determining for me what I can or cannot borrow and repay. Each party should make their own determination of how far they can go, and the loan should be the lesser of what each comes up with. And if the loan isn’t repaid, it should be a black mark for both. In the case of the lender, the penalty is easy to determine – it’s the loss of the unrepaid loan amount. In the case of the borrower, there should be a large penalty too. I don’t see that large penalty being applied now. I guess I still think the system is lopsided, and borrowers need to be held more accountable.
