View Poll Results: Who deserves the blame for a loan default, the borrower or the lender?

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  • The borrower, they shouldn't be taking out a loan that they can't pay back

    32 62.75%
  • The lender, they shouldn't be making loans that they suspect will default

    11 21.57%
  • The government for guaranteeing the loan

    8 15.69%
  • The government for failing to adequately regulate the lending process

    8 15.69%
  • All of the above

    16 31.37%
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Thread: Who to blame: the lender or the borrower?

  1. #11
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    Re: Who to blame: the lender or the borrower?

    Quote Originally Posted by Rhapsody1447 View Post
    If a person defaults on a loan, who deserves the blame the lender or the borrower? As credit eases and lending standards go down, more and more loans are made to people with riskier credit histories. A lot of times this can lead to predatory lending practices (e.g. adjustable rate mortgages that reset at a much higher interest rate, banks pushing loans on people who can't afford them), however sometimes it is necessary for the government to ease credit conditions in order to help spur economic growth (e.g. by making it easier for people to buy a house or start a new business).

    So if I take out a loan and fail to repay it, is it my fault or the bank's?
    It takes two to tango.One is just as much to blame as the other.
    "A nation can survive its fools, and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and carries his banner openly. But the traitor moves amongst those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself. For the traitor appears not a traitor; he speaks in accents familiar to his victims, and he wears their face and their arguments, he appeals to the baseness that lies deep in the hearts of all men. He rots the soul of a nation, he works secretly and unknown in the night to undermine the pillars of the city, he infects the body politic so that it can no longer resist. A murder is less to fear"

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  2. #12
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    Re: Who to blame: the lender or the borrower?

    I don't understand the reasoning here. It seems like the answer with the most votes is it's the fault of the individual for taking out the loan in the first place. Does the bank not bear some responsibility here for giving it to him?

  3. #13
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    Re: Who to blame: the lender or the borrower?

    Quote Originally Posted by 1Perry View Post
    I don't understand the reasoning here. It seems like the answer with the most votes is it's the fault of the individual for taking out the loan in the first place. Does the bank not bear some responsibility here for giving it to him?
    The banks must take some of the blame but I also people need to be more educated on topics like their credit score etc. I belong to a credit union who teach young people to be responsible and won't even touch you until you have established credit, any current delq tradlines or collections and you can forget it. This is the kind of policy banks should embrace!

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    Re: Who to blame: the lender or the borrower?

    Quote Originally Posted by Higgins86 View Post
    The banks must take some of the blame but I also people need to be more educated on topics like their credit score etc.
    I'm all for removing the secrecy behind it. You should be able to look on the internet and see your score. (for no charge)

    I belong to a credit union who teach young people to be responsible and won't even touch you until you have established credit, any current delq tradlines or collections and you can forget it. This is the kind of policy banks should embrace!
    Hmmm, seems most credit unions are more willing to work with a person.

  5. #15
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    Re: Who to blame: the lender or the borrower?

    Information is freely and easily available to the borrower, though not necessarily through the lender. Because information can be sought out with minimal effort it is as much the fault of the borrower for defaulting as it is the lender for providing a "questionable" loan. I knew what an ARM was before I was out of high school (9 years ago). I knew that a lower interest rate (fixed, not based on variable + prime) was the best option. I knew that maxing out credit cards was bad. I knew that I shouldn't borrow more than I needed (i.e. I didn't need a $45k vehicle, so I didn't get one..even if I might have been able to make the payments...barely). I'm not special, hyper intelligent, born to financially savvy parents, or remarkable in any way.

    Most people, if they were willing to put in the effort to protect their own assets, could know as much as is needed to make smart borrowing decisions and avoid default (outside extraneous situations, which are relatively rare).
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  6. #16
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    Re: Who to blame: the lender or the borrower?

    Quote Originally Posted by MaggieD View Post
    It depends. Did you lie on your application? Did you say you made more money than you made? Worked where you said you worked? For the length of time you said you worked there? Earned what you said you earned? Did you lie about what you oiwed on credit cards? If you didn't lie on your application, in my opinion, its not your fault.

    Mortgage brokers lied. They failed to disclose a whole bunch of stuff to borrowers. Like: zero interest for a year, then 12% after that for the next two, then 14% after that; Like 1% interest for two years, then a balloon payment due. What they didn't explain was that if your home didn't appraise, you couldn't get refinanced in order to pay off that balloon, so you'd lose your home. Most people aren't financially savvy. These are the people who trusted mortgage brokers. Mortgage brokers knew their stuff inside-out; worked on commission; sold anybody they could stupid mortgage products that weren't at all in their best interests, and quickly moved on. Jerks.
    If there were/are instances where mortgage brokers actually lied, then I would and do agree with you. I purchased homes during that period. I knew full well what an ARM was and knew the terms before I ever signed for any loans (and algthough I came close 1 time was never stupid enough to actually get into an ARM) and anyone that says they didnt know is either or a liar or didnt bother to read the very paperwork they were signing. If they were lied to there should be some fraudulent documents showing every single page they signed. I get it though...it is much more convenient to blame someone else because the homeowner was an idiot. Most people bought those homes figuring...hey...market is booming...I get in now, in 2-3 years we either sell or do a refi based on the projected equity...we can swing this deal.

    MOST people were stupid and voluntarily got in over their head. They deserve the blame. Some may well have been lied to. I dont disbelieve you...i just find it really hard to visualize the 'guillible' homeowner that doesnt look at those figures. How do we protect someone like that from themselves?
    Last edited by VanceMack; 10-25-11 at 07:03 PM.

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    Re: Who to blame: the lender or the borrower?

    Quote Originally Posted by 1Perry View Post
    I'm all for removing the secrecy behind it. You should be able to look on the internet and see your score. (for no charge)



    Hmmm, seems most credit unions are more willing to work with a person.

    maybe some credit unions but credit unions I have been a member of have always had tighter policies especially with auto loans and credid cards which is the way it should be. People should not be able to open more tradelines when they have current delq or collections.

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    Re: Who to blame: the lender or the borrower?

    Quote Originally Posted by VanceMack View Post
    If there were/are instances where mortgage brokers actually lied, then I would and do agree with you. I purchased homes during that period. I knew full well what an ARM was and knew the terms before I ever signed for any loans (and algthough I came close 1 time was never stupid enough to actually get into an ARM) and anyone that says they didnt know is either or a liar or didnt bother to read the very paperwork they were signing. If they were lied to there should be some fraudulent documents showing every single page they signed. I get it though...it is much more convenient to blame someone else because the homeowner was an idiot. Most people bought those homes figuring...hey...market is booming...I get in now, in 2-3 years we either sell or do a refi based on the projected equity...we can swing this deal.

    MOST people were stupid and voluntarily got in over their head. They deserve the blame. Some may well have been lied to.
    Maybe people should but it would take a week to read through an entire home loan. People should also be able to trust their banker.

  9. #19
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    Re: Who to blame: the lender or the borrower?

    Does it have to be the same for all cases?

    Or can it vary depending on the specific circumstances?
    I may be wrong.

  10. #20
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    Re: Who to blame: the lender or the borrower?

    Quote Originally Posted by 1Perry View Post
    Maybe people should but it would take a week to read through an entire home loan. People should also be able to trust their banker.
    I sat with my wife at a table going over every line and looking at the cost of the property we just 'had' to have and looked at the monthly payments, the percentages, the final dollar figures, etc. We went through the same thing I am willing to bet MOST of those that are dealing with loan defaults...we can do it...if we roll in the car and the truck payments...no more credit card debt...get rid of the cats...eat Ramen for 3 years, tell the kids we are now athiests and no more christmas...we can swing this easy. I'll get a few raises, you can take on another job part time...we refi before the adjusted rate kicks in (its always easier to refi than buy a new home)...maybe we take out a second for a few years if we have to...we can DO this honey...

    I am not saying some werent 'victims'...I AM saying most were 'stupid.'

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