Should the government bail out subprime borrowers?


"No way. The same situation existed with farmland in the 1980s. No one came to the aid of the farmers. Farmers lost their land; now subprimers will lose their houses. Don't borrow--pay cash." -- Jo H., Iowa

"Absolutely not! Why should my tax dollars go to bail out someone who made an irresponsible decision? I am living within my means and make financial decisions and purchases based on what I can afford. These people got in over their heads of their own volition. They knew what the payments would be in future years. In addition, we all know what happens when the government gets involved: Waste, Graft, etc." -- Chris H., Illinois

"No, the government should not bail out subprime borrowers. If these borrowers would have slowed down, done some research into loan options, a lot of them would not be in the situation they are in now. Rushing into something as large a purchase of a home is not wise, nor is not saving for a down payment. In the past, I also lost a home to foreclosure, but it was due to a declining economy in the area I lived in. The same thing is happening in the area I now live in -- just north of Charlotte, NC, where some textile mills have closed. I am in great financial shape now, and am lucky enough to be able to help some of those close to foreclosure. I have purchased 7 pre-foreclosure homes, saving the credit of the owners, renting the home out to the former owner for less than their loan payment was. They are saving some money now, and are appreciative renters. In fact, I am working with 3 of the families on a rent to own plan so they can repurchase the homes they are still in. I am not making a lot of money on this, and am real picky on who I choose to help. But at least there are 7 families who won't have the misfortune I had." -- J.P.M., North Carolina

"God No! People need to learn to be responsible for their actions and their finances. It's time for some tough love!" -- Michelle J., New Hampshire

"This is exactly what the Fed wanted. They wanted to crush the housing boom and they have done that and in the process putting the economy close to a recession. If they want to fix the problem all they have to do is to lower the rates. The homeowners can refinance at a lower rate and keep their homes." -- Don P., Missouri

"The gov't should help borrowers if they were really misled. I have heard that some borrowers took out loans with no intentions of making any payments knowing that it would take at least a year for anyone to foreclose on them and move them out. They would have a place to live without expense. That is a sad commentary on our society. Who was really scamming who?" -- Nancy P., Maryland

"All of us with a mortgage had many opportunities to use a subprime type of loan and declined because it is obvious that it is not a good idea. We declined so that we were assured in the long term that we could handle our mortgage and our homes would be secure. So now the government wants to come along and use my tax money and help them out. Why do we always reward stupid decisions? How about subsidizing good choices and help me just because I used some long term planning on a mortgage I can handle myself. As long as the government is there to bail you out, there is no reason not to gamble with your home and financial future with these lame and ludicrist financial schemes." -- Kelly B.

"Of course not! My daughter works in this industry and it is very clear what the deal is when someone buys a home, our government has made this possible with documentation. If buyers are not smart enough to understand the details or if they have not looked at history of home values and just get caught up in unrealistic frenzy of house gains, it’s no one’s fault but their own." -- Neil M.

"Absolutely not. The government needs to go after the subprime lenders for their misleading, misrepresentation of facts about the monetary cost and inherent risk of excessive debt. This is another form usury and needs to be stopped. Furthermore, the lenders need to bare the brunt of the burden. This tactic is little different than the the excessive fees and usury practices by banks and credit card companies. The US population is grossely ignorant about economics and the finncial wellfare of an economically functioning society." -- Robert H., Oaklahoma

"No!! Lax credit standards and all-too low rates have allowed people into homes they should not have been able to acquire otherwise. If people lose 'their' homes and have to downgrade to condos, apartments or even back to their parent's homes, then so be it. Homes and land are overvalued by at least another 25-50%. People who manage to keep their homes better plan on staying in them a long time - maybe just to break even. If the average wage earner cannot afford the average cost of a house on a 30-year fixed mortgage, prices must come down -- NOT rates." --Craig C., South Carolina

"No, both the borrower and the institutions knew what they were doing when they offered and accepted subprime loans. Now they must accept the responsibility for their actions." -- Bonnie R., Florida

more responses...

"I would say that the answer should lean more towards 'yes' than towards 'no.' Some of the people that have posted on this blog fail to take into account the effects of what this mess could bring to the economy. Consider this – last year the subprime mortgage market constituted roughly $600 billion in homes; I find it incredibly difficult to think that if those homes are foreclosed upon how it will not adversely affect everyone’s home value in the U.S. Furthermore, if the government chooses to do nothing about this then it will reduce consumer confidence – in addition to helping these borrowers out, the government should enact tighter regulation on licensure for individuals who are writing these loans. Many, if not most, of these borrowers did nothing wrong – they were looking to live their American Dream like everyone else – and fell victims to predators looking to make a buck. The millions, yes millions, of borrowers who went into these loans should not be the only people who suffer because their increased business (through purchases, refinances, home equity loans etc) have helped sustain the economy over the past year and now people suggest we forget about them? That thought is preposterous!" -- Chris L., Florida

"Yes, the government has no choice but to step in, this is terrible situation that is affecting the real estate market as a whole not just the properties that where financed with subprime loans. If no one helps these borrowers that are likely to loose their homes to foreclosure, this will more than likely put more pressure on an already depressed real estate market. So while there should have been federal guidelines on these lenders in the first place, as Chairman Bernanke has said, unfortunately in many circumstances it takes something happening for the Fed to react. Well clearly something has happened and it appears that the Fed is taking appropriate measures to prevent this from happening again in the future."-- Brett Z.

"Absolutely not. These bottom feeders got plenty of hardworking, but naive and under-qualified Americans in deep financial trouble and should share their pain." -- Clyde N., Tennessee

"The old way to do business was to buy low, sell high. Now it's buy high, sell higher, except that now they can't sell. I saw this saying on the Web that sums it up: 'Remember, there is never a refund on losing housing lottery tickets.' It's time for a lot of Americans to learn Economics 101 the hard way! Bailouts will only postpone the inevitable! And exactly WHO is going to pay for these proposed bailouts? NO WAY!" -- Victor H. Pennsylvania

"As much as people think the government should not interfere here, if it does it will save taxpayers a lot of money in the long run. The best thing they can do is make those who bought the mortgages in the secondary market to allow the lenders to make deals with borrowers to avoid foreclosures. An avalanche of foreclosures will drive down the real estate market which will ripple into the rest of the economy and create havoc. Better to minimize the damage up front and not wait until the issue reaches it peak of destruction." -- Jim A., Connecticut

"Absolutely not. That will only make the problem bigger. If we truly practice capitalism, then it's about time we allow some creative destruction to occur." -- Mark M., Florida

"Absolutely not!!! We need less government in our lives, not more. People in this country have become too reliant on our government to come to the rescue every time bad decisions are made that result in a financial hardship. What politicians seem to conveniently forget when they are trying to buy votes from and appease those that are on the wrong side of a trade is that one side will win and one side will lose – it is a zero sum game. The overburdened U.S. taxpayer should not continually be expected to come to the rescue every time someone makes a bad choice and loses. Are we as citizens someday going to be expected to bail out those that lose money in their trading accounts as well? Where does it end? This cradle to grave dependence on our government has to end and people need to start taking responsibility for their own actions and not expect a lifeline every time a decision results in an undesired outcome." -- Dan R., Illinois

"NOT A CHANCE." -- Richard B., Florida

"No, subprime borrowers took a gamble by leveraging themselves and betting home prices would continue to appreciate. The bet was a bad one and now they must pay the consequences. As a first time home buyer, the lower prices caused by the subprime blowup finally give me a chance to get in, sounds like an efficient market to me." -- Brian W., California

"Absolutely not. This country too often does not allow people to suffer consequences for bad decisions. If you stick your hand on a hot coal and you don't feel the burn you are likely to touch one again. If the government does anything it should be to improve the quality of financial education in this country, which is woefully inept." -- Jefferson D., Georgia

"NO! They didn't bail out those burned when the stock market bubble burst in 2000." -- Art W. Florida

"No, the subprime guys got greedy and knew the consequences when they wrote the mortgages to people they knew could not afford them." -- Tres M., Texas