Where was all the finger-pointing when subprime borrowers were making money?

With all the articles, all the testimony to Congress, all the regulatory scrutiny that mortgage lending is receiving today, I have to wonder why no one was complaining during the real estate boom. When subprime borrowers, little old ladies, people on fixed income, minorities, et. al., were able to secure financing for homes they could ill afford, but COULD sell at a profit, there was no hue and cry, no accusations of predatory lending, no senate investigations. No, when subprime borrowers made money on housing appreciation, no one complained.

Well, the "bitter renters" - as anyone who questioned the economic fundamentals of the bubbly market was called - certainly complained. Many folks who wanted to buy a house, who had secure jobs and sizable downpayments, were "priced out." Perhaps they could not afford prices that were 3x the prices of just 5 years earlier. For many, they could afford the price, but could not justify the risk. For whatever reason, many well-qualified borrowers were outbid and outpriced by poorly-qualified buyers. Those buyers who would have happily bought a home, and paid every mortgage payment on time, were pushed out of the market by buyers who had no need for sensible pricing.

The government is now talking about bailing out buyers who bought over their heads, taxing everyone to keep foolish buyers in their McMansions, their luxury condos, their sparkling kitchens with Viking ranges and sub-zero freezers - as well as keeping foolish buyers in their modest bungalows, inner-city flats, and major fixers. The very people who outbid responsible, qualified buyers are now the "victims", needing government help to stay in homes they cannot afford. The sad reality is, a bailout will merely postpone the inevitable for most such borrowers.

The type of people who run up high credit scores are typically the type of people who continue paying their mortgage, even if they become "upside down" with a mortgage balance that is greater than their current home value. The type of people who let their credit ratings drop down to subprime levels are typically the type of people who just walk away, letting the bank hold the bag on price declines.

Why is it okay for prime borrowers to share in the gains AND the losses on real estate, but subprime borrowers should only share in the gains? Why should prime borrowers, renters, and every other taxpayer shoulder the cost of bailing subprime borrowers out of their mortgages? Let's face reality here - subprime borrowers are subprime for a reason. For some, they were incredibly careful and responsible, but hit hard times. For far, far more of them, they became subprime because they over-extended, lived above their means, were slow to pay debts or failed to pay them at all, declared bankruptcy, etc.

ABSOLUTELY, some subprime borrowers got that way through no fault of their own. Others got there by making mostly good financial choices, but they took some risks that didn't pan out. While others just never cared about paying bills. Look at C. Serin, posterboy of the foreclosure explosion. His blog seems to have fizzled, but he can still generate tremendous sparks by the mere mention of his visits to Starbucks, dining out, buying a car, turning down jobs - even though he is reportedly defaulting on $2.2 Million dollars in debt.

Oh, and, by the way, Mr. Serin's debt is not merely mortgage debt. He paid off his credit cards with some of the cash he got back at close - yes, he was able to buy houses AND get cash out at close, effictively paying him to buy - and he ran the cards up again. He lied to lenders to get his mortgages. He gamed the system. He is one of the so-called victims of bad lending practices.
Ironic how the pundits blame "Wall Street investors" for the mortgage mess, but only the far-right-wing media asks borrowers to shoulder their fair share of the blame. These supposedly genteel, wealthy "Wall Street" types are just as often teachers, blue-collar workers, white collar workers, grimy fingernail workers, and anyone else with a 401k. True victims of shady mortgage lending have recourse available to them without any additional government involvement. The investors who held mortgage company stock, mortgage-backed bonds, and related investments in their retirement account, they have no recourse. Even irresponsible buyers will be able to negotiate with lenders in this very shaky housing market. Government intervention at this point will just unfairly burden taxpayers - and it sends the wrong message to borrowers that borrowers needn't take responsibility for themselves, needn't read and understand contracts, needn't have rainy-day savings, needn't buy prudently, choosing homes that they can afford in good times and bad, choosing mortgages that they can afford both today and in the future.