Even responsible people with good credit scores can be convinced by aggressive loan officers 😉 Responsible people tend to “follow the herd” and don’t want to stand out. If all of their friends and relatives are in a buying frenzy they don’t want to be doing something else. After all if everyone else is doing it then it must be the right thing correct?
Homeownership has been lauded as the cornerstone of stability for so long that people are convinced that they can never go wrong by owning a home in the long run. No matter what kind of toxic mortgage they get, they believe their home will appreciate and things will be okay. Most of these new homebuyers have not done any due diligence or independent research to find out that Real Estate is cyclical and tends to have steep increases and decreases. Rather they operate on implicit trust of their “friends” who never stop to remind them how homeownership is going to slip out of their hands forever if they do not act immediately. The pressure to conform is tremendous.
They have been brainwashed into believing that the most important thing is that they don’t miss the boat to homeownership. So these normally responsible people with good credit do anything and everything possible to “not miss the boat”.
This is why even prime borrowers will lose their homes in this downcycle.
