On Friday’s Your World (2/10/12), Charles Gasparino attacked discussed President Obama’s $26 billion mortgage settlement. As Media Matters wrote, “Right-wing media have responded to the $25 billion foreclosure settlement between banks and government authorities by attacking struggling homeowners who could potentially benefit from the deal—calling it a 'deadbeat bailout'—and by whitewashing banks’ alleged foreclosure malpractice.” Gasparino wrote the column called “deadbeat bailout” in the New York Post (a sister company to Fox). In a typical bit of media and conservative messaging synergy, Cavuto hosted Gasparino to discuss his column.
Gasparino's column was subtitled, “Team Bam’s blow to housing.” You can get the gist without reading one word more.
Cavuto described the column as “pretty powerful.”
Gasparino gave a big FU to struggling homeowners. He told Cavuto and the Your World audience, “If you think about some of the people that don’t deserve bailouts, bankers clearly didn’t, but all these homeowners that bought homes they couldn’t afford didn’t deserve it, and the way the market works you buy something you can’t afford and you have to give it back, that teaches you a lesson. It basically creates the consequence that is needed so you don’t make that mistake again.”
Cavuto didn’t mention any of the “pervasive misconduct in foreclosures.” Instead, he too suggested homeowners were getting an undeserved break by sneering, “Twenty five to twenty six thousand off your principle, seems very pricey to me.”
Gasparino said, “It creates moral hazard, which as you know is the consequence to no risk, no consequences take risk. The only positive is we at the Fox Business Network broke the story.”
Cavuto laughed. “On my show. Quite an honor… Good job, Buddy.”
I just think that a blanket statement that the buyers didn’t know what they were getting into when buying these overpriced properties goes past what actually happened here. It assumes that the buyers were not reading the documents they were signing every page of, or that they simply didn’t understand the terms of their loans. I’d like to think that most people, when making such a significant investment (for almost all of us, it’s the single biggest investment of our lives) would take the time to find out exactly what they were getting into. And that could and should take more than 30 minutes.
I’m not denying that there were bank and real estate people who acted in an unscrupulous way. There absolutely were. But there is still something to be said about the responsibility of the buyer. Again, without getting into the morality detour, the buyers were not forced to sign these papers and agree to these terms. I believe the overwhelming majority willingly signed because they wanted that nice house and because they assumed that if anything went wrong, they could just sell it at a higher price and still come out okay. I believe many of them didn’t think through the ramifications of the downturn that people like Dean Baker were warning about for years.
Many people specifically did NOT buy the expensive homes during this time because they knew they couldn’t afford them. There’s a simple logic to this – if I’m making 50K per year, that means I can’t afford a 500K house. I can’t afford it even if I take an ARM with no downpayment in the hopes that I can sell the house if the balloon payments are too much. Because at that point I’d be gambling – and doing so with the most significant purchase of my life.
And again, this doesn’t mean that there weren’t some really slimy real estate people peddling overpriced properties under ridiculous terms. There were. But nobody forces me to deal with those people – if the numbers don’t add up, I don’t press that button.
Even more to the point for this, I’m not certain that the Obama Administration relief effort here can do much to help the people who are underwater by hundreds of thousands of dollars. Further, there are plenty of people who paid their mortgages for 20 and 30 years and played by the rules, who are wondering why they don’t qualify for any relief…
I’d be willing to bet the overwhelming majority were folks who went into the bank or mortgage loan agency with an idea of what they could actually afford, but were suckered into buying a higher-priced property with talk of how “safe” an investment they were making.
And, Kevin, it has very little to do with “smart” or not, mortgage paperwork is just a variation on the language of Legalese. Key points are seldom—if ever—highlighted and the people selling the mortgages and home loans are less interested in helping the buyer and more interested in making THEIR money. They specialize in making sure that you aren’t given enough time to really read the terms with the thoroughness you actually need. Think of it like most of the “terms of service” when you download a new program or use some type of equipment; yes—you should read the “terms of service” but when those terms are written in legalese and can take more than 30 minutes to read in detail before you can make a truly informed decision, most people (“smart” or not) tend to simply click “I agree” and go on with the hope that they won’t be bitten later.
Is there some reason that mortgage paperwork CAN’T be written in simple, easy-to-understand, everyday language? (The same question applies to laws coming out of Washington and your local state legislatures, but I digress….) Is there some reason that the paperwork can’t provide a “highlight” cover page (with references to the full contract’s actual page number/s for more detail)? I think the answer is this: If people were able to fully understand the terms of their contract (and in LESS than 30 minutes), people would be far less willing to sign their lives away to the banking industry.
I’d like to think that most people are smart enough to read the mortgage paperwork they are signing. For me to believe that nobody knew what they were getting into, I’d have to ask why – buying a home is a significant life investment not just of money but of time and family experience.
That said, it’s clear that the Fox News gang will trash any effort by the Obama administration to try to help individuals or the economy. And as this election year goes on, these kinds of attacks will only get worse. We’re only in February now, so we have 8 1/2 more months to really get into the gutter.
Gasparino seems to be stuck in RW SupidSpeak, about on a par with Sarah Quitter.