The Blame Game Forforeclosures

As the foreclosure juggernaut rumbles on crushing everything under its path, the blame game for foreclosures continues unabated. The foreclosure epidemic has been raging for over a year and the throwing the ball backward and forward has been a favorite pastime.

Greedy banks went preying around for the gullible and saddled them with the ARM adjustable rate mortgages. It was cleverly done by not highlighting the point that the low monthly payments of the first few months would soon double or even treble. The levels would be well beyond the affordable limits of the borrowers.

No less greedy were those who sought to buy reo homes. They sniffed out easy loans assuming that the real estate market would keep on rising and in the near future they could clear the mortgage while keeping tidy profits. To them nothing could be worse than failure to pay the mortgages but even that could be solved by selling the house. In their wildest dreams they never thought that prices instead of rising would actually tumble and fall. This negated all their plans of refinancing and drawing on the equity to make fancy purchases like vehicles, jumbo television sets, cars and other adult toys.

There is some truth in blaming both the lenders and the borrowers for the present foreclosure fiasco. But other economic factors have been at work also – much more dangerous than good old greed of the human savage. If not then why is it that the rich in California remained untouched by foreclosures? Why is it that only the middle class gets the bulk of the foreclosure notices?

The reason for this disparity is that the rich are getting wealthier and to them an increase here and there is of no consequence. The inflation and rise in food and fuel prices too they can ignore and brush away like pestering flies. It does not make any substantial dent in their pockets. This angle of the foreclosure crisis becomes clear from the reports submitted by the Franchise Tax Board of the state that collects taxes and California Budget Project. The latter is a non-partisan body based in Sacramento. It is seen that while the income of the wealthy section increased by 0.3% the earnings of the middle class dropped by 1%. The middle class consists of 40% of the taxpayers. Their incomes are dropping at a time when expenses are rising. Foreclosures are adding fuel to the fire of economic woes.