I am absolutely fascinated by people’s ability to hold home buyers virtually harmless in this last great price run-up. When a homebuyer in 2005/6 gambled with someone else’s money, in the hopes of keeping 90% of the future upside profits, is it really “predatory” if they get stuck with 10% of the downside losses? I’d call that a nearly free call option, and it was an incredibly sweet deal for the homebuyers, many of whom committed fraud to get the loans. Quibbling over whether the buyers paid 3% more or less for these call options is like asking if the bank robber had to pay too much for gasoline for the get-away car.
You say homebuyers are losing “their” houses? They never paid for more than 10% of their houses in the first place, if that. I’m sorry that they lost their garages to C’wide. And I’m even sorrier that C’wide’s MBS investors lost 25% of the value of the rest of the houses to the previous sellers.
Sure, all those middlemen share some blame, but the big bucks and blame rests firmly with the buyers. They could always have rented if shelter were the only issue. Even the dumb ones were speculating, and they knew it, and now they want to shine the spotlight somewhere else.
