Who’s to blame?

22
Jan

No snowflake in an avalanche ever feels responsible.
-Voltaire

Wise words from a wise man. I think Voltaire touched on a very important point. In an avalanche, who’s to blame? Each snowflake can say about himself, “Look at me. I’m too small to do any damage. It’s not my fault.” And who’s really going to argue with it? But put all those snowflakes together and you get an avalanche capable of massive destruction.

Our country has been going through a crisis for over a year. And wouldn’t you know it, the second recovery begins to appear around the corner, the finger-pointing begins. Well, let me correct that. Finger-pointing is the oldest human art dating all the way back to the first guy to have fingers (remember Adam, anyone?). And since the beginning of the recession, blame has been tossed around more than a tossed vegetable salad.

But now things have started to get serious. The blame comes with punishments, and harsh measures. It’s not just a question of who’s responsible for the crisis, the unemployment, the homelessness, but rather, who’s going to pay for it.

Obama has decided that the blame lies with the banking industry. Admittedly, it’s a bigger snowflake than most in the avalanche. And Obama’s plan which I’ve written about before is to make the largest Wall Street banks repay what the bailout cost the government. That’s assuming all the hundreds of billions in loans get repaid. But the bottom line is that $117 billion is supposed to come out of Wall Street over the next ten years.

Now, I’ve been listening to word on the street and most people I’ve talked to seem to think the other sectors of the economy should shoulder some of the financial burden. Fannie and Freddie, for instance, are frequent targets of the finger pointing we talked about before. And they’re certainly largely responsible for the current crisis. Maybe they should be penalized in some way.

But let’s think about this seriously. The two organizations together guarantee about half of the mortgage market. The wisdom of their investments is suspect, but how effective will monetary punishments be? The housing market needs to look at them as points of stability, not as suspects. If Washington starts clamping down on all the Mae’s and Mac’s out there, who’s going to fill the gap?

People aren’t going to have confidence in the housing market. Investor confidence is already through the floor. Any more shake-ups or impressions of weakness are going to just make the recovery that much harder.

But that’s just one opinion and I’m sure all you folks out there have more to say on this issue.

So let me hear from you. And have a great weekend!

Dale

Any money given back to the government for bailouts will never be seen by the taxpayers who supplied the money in the first place. No one in the government or current administration is holding anyone responsible for the mess we are in except playing politics as usual and blaming the prior admininstration only since it is a different party. Heads should roll and people should be fired or put in jail for some of the things that are going on behind closed doors in the government and many are doing it for their own well being.
Cliff

Hey Cory, I’ve been investing in real estate for many years and this is the worse I’ve ever seen it. If the banks would have just let people keep the lower interest rates instead of the greed adjustments they could have kept their homes which would have ment at least a few less foreclosures. This economy started going bad with the Housing market and it should of been the first thing addressed to fix it.
I was using Rehab Funding doing rehab and flipping deals myself making good money. Then the market turned and all my open doors for self employed were closed along with rehab funding even though I made them money over a 2 year period. It has been very difficult since I was in the middle of deals with a lot of my own money out and now I’m looking at possible foreclosures and tax issues.
I get emails of all the info from You, Preston, Than Merill, J Bosch, DC Fawcett and others. I go to the webinaires. The problem with all the info you guys give is that there are folks like myself that have found themselves trying to keep our heads above water. So when you talk about such a great product like freedom soft that can change your life, how can those that need it most get it. The price may be well worth it but when your struggling to survive it might as well be 1 milion. Some have no money/jobs and are desperate. Can you help us? Thanks Cliff
http://MohaveRealEstateSolutions.com Suzay, your student

Cory,
that was a great reminder that “gladiator thinking”, blaming, and finger-pointing simply adds to the negativity: and is not an answer.
We are the answer to so much of this problem: by working our businesses!
We are exploring our ShortSaleBuilder tool from Cory to apply “leverage”to this market-I’m a beginner, but you can certainly help more families with SSB…it’s like the difference between a shovel, and a Bobcat.
Put your back to it, and do more than you ever thought possible for 2010. I will, Suzay
Tommy

Cory, I have just heard of you within the past couple of weeks. I have enjoyed reading some of your articles. I really appreciate the fact that you acknowledge God and prayer and being a servant. I feel like this is the main goal for our lives and as we serve others things will fall into place in our own personal lives. He wil guide our every step if we let Him. I feel like He has led me to you for encouragement and guidance. Several years ago my wife and I bought, fixed, and resold eight or ten properties – The hard way. Our first child was born, life got busy and we quit investing. We are very interested in starting again, but everything has changed, market wise, and we’re lost in the beginning. I just had a great deal opportunity of a 118K property appraisal where I had an accepted counteroffer from the bank of 52,500. I was trying to get funding through my bank and they shot me down. I am trying to regroup and figure things out. I don’t have any investors to fall back on and not sure how to get them. The Freedom Soft program is very exciting but no funds to acquire it . Be blessed and make this a great day.
http://outofthisworldhomebuyers.com Kaipo Duncan

Blaming others is the easy way out I’ve been hearing a lot of it lately from the leaders of our country. However, Americans are a lot smarter than that and the best thing to do is accept responsibility and stop the fingerpointing. Its true blaming others leads to more doom and gloom. Living life with a positive attitude will lengthen your life and make it better. We need to elect more positive people into office.
Pete

Blame? Our current situation , in my opinion , did not just start with the bank. We should have paid more attention when the gas prices skied rocked. Most americans when from paying $25 to $75 – $100 for a fill-up in matter of weeks. Gas prices has not gone back to those prices. Gas company always has and still has excusses for raising the price, even if oil prices drop. The banks also being greed, made loans with rediculous terms and to buyers that had no right in getting those loans that we find ourself no trying to fix what was ill managed. Who do we blame? I think we need go back awhile and start pointing fingers to politicians, oil and gas companies, banks with it leaders, and more….as to who is at fault.
PATRICK

It is important to learn from history, ie, who/what’s to blame for the current economic situation. More importantly, once we’ve learned the important history lesson, we should ask, “how can I be part of the solution?” The snow flake analogy is not only excellent for noting how catastrophes are created, it’s just as good for describing how good things come to be. How can my own economic recovery help right-side up the huge USA economy? By itself it cannot. But if I’m part of the recovery, and I share my knowledge and experience with the other investors I meet, and we all get really good at buying, rehabbing, or just reselling at or below current market value – letting some of the air out of the housing balloon, and making housing affordable again — we together can make a very significant contribution to our great nation’s recovery. What do you all say, shall we do it!? C’mon, let’s rumble!
DeBorah

I understand that Fannie and Freddie are a significant segment of the mortgage market, yet some degree of accountability has to be taken. I agree with you Cory concerning the effectiveness (or lack thereof) of monetary punishments. Khalil Gibran, the great Lebanese poet once stated: “What penalty lay you upon him who slays in the flesh yet is himself slain in the spirit? And how prosecute you him who in action is a deceiver and an oppressor, Yet who also is aggrieved and outraged?”
Joseph H

Hey Cory,

Who’s to blame? I belive that the banking and financial institutions are largely to blame for this crisis that we are in and they should have to pay. The bailout should be treated as a loan and should be paid out, since the banks are paying themselves millions again in bonus, while we are the one’s still suffering. They really don’t get the how serious the mess that we are in. Fannie Mae and Freddie Mac should have some blame for this mess as well, as they did not do a great job of securitizing mortgages.
Red Mikhail Tolentino

Blaming will just make the situation worst.

Red, ph
http://www.RaleighRealEstateGroup.com Neal B., North Carolina

Our country is indeed in a great financial crisis and these bailout plans that the President has been giving out are in no way going to help us taxpayers. I think the government is only making things worse by not addressing the real problem. I sure hope they get a clue soon before we reach a point of no return.
Neal B., North Carolina
http://www.suitelifedesign.com Crystal*S

It’s significant that you mention Adam…. Remember the creation of Adam. Where God and Adam, point at each other… so perhaps, the creation was needed in order to alter where we were headed….

Interesting, that Snow is representative of “The Father” or God. If all the snowflakes, are a part of God, then that is the part of ourself, that is in agreement….each being a snowflake in the bigger pic.
http://www.OptionInvestmentServices.com Laura B., Georgia

I agree that blame and negativity are not productive and I will not go that road because it fills my mind and soul with negativity. I prefer to focus on the positive. Remember the survivors of the Nazi camps that refused to live in hate, without hope, and prefered to live in the positive and try to make everyone’s life better, even to the guards. They came out with their souls whole, not broken, and could enjoy life. So, if we take their lead, we must look for options. We could look to private money for funding sources. How many people know about self-directed IRA’s? This is a great source for funding your rehab/investor deals and you are giving the IRA owner 10-15%+ in returns on their investment which grows their retirement money much faster than the 2-3% they are probably getting now. This is one win-win-win example. Don’t forget to be creative in your thinking and push the boundaries for the good of all.
Brandy K. O’Neal

Almost every aspect of our nation must bear some blame. Our economic status may have be exacerbated by the banking industry but let’s face it we often live above our means. I am one of those Americans that when I was making money I did not ask myself “What If”, a great number of people that paid attention to what was going on are still doing ok, then there are the people like myself chose to ignore it, thinking I was invincible, things like that happen to other people. Now having said that there is a great deal of Americans who were just making ends meet without all the bells and whistles of life, they were just trying to keep food and shelter for their families. These people were hit very hard when the corruption hit and many jobs were lost. That’s when the snowball rolling down the hill started to roll faster and get much bigger…it rolled and crushed a many people. If we can fix the job market and focus on minimizing corruption in the larger corporations that are tied into our nations, then I am of the opinion that money will flow again and banks will regain some reasonable strength and be able to pay the government back. Brandy O, Georgia
http://www.fantasticpropertydeals.com Jo A

Greed and short-sightedness seem to be what Fannie, Freddie and Wall Street have in common. Along with some major banking institutions. I am not saying it’s not fair to go after making a buck, but I am saying that how they have gone about it includes the above attributes. I agree not financially penalizing Freddie and Fannie, but there needs to be a major overhaul in how these institutions are run if they are to have so much clout in the market. They may need to consider some treatment for their schizophrenic-like decisions. Someone commented that we have brilliant people in this country- can’t they help? Yes. But the brilliance needs to be applied to our economy and some of these bigger players with the best interests of the country in mind and some long-range planning. Not just the quick, someone-pay-cash-back fixes. Things like- your basic, “If I sign my name to this, it means I am responsible for it” fixes. Down to an individual level. That would have incredible results over time. But we don’t really like things to take time.
Steve A, St Louis

The banking industry is fully to blame for this economic meltdown because they got greedy in allowing loans to people that really should not have gotten them.

Now when the homeowners can’t pay their monthly payments the banks are now getting what is due them. But unfortunately that affects the whole housing industry. So I am working in the one market that all of this has made many more opportunities for investors, the luxury short sale market.

Many multi-million dollar homes are going up for auction than ever before. Prices are plummeting and the market is resetting itself. Now when I work a short sale on these homes the banks have to take a bath and I can resell the properties to end buyers at a price that the current market will bear, which is a lot lower than the currently listed price. So with this situation with the banks is making this market VERY LUCRITIVE!!
Craig W. in PA

The bottom line is blame doesn’t solve problems. I met with my two business partners yesterday after a promising deal fell through. I was really down about it until one of my business partners told me “remember that opportunities are always in front of you, not behind you. Always look forward”.

The big guys will always look out for themselves. We already know that we have to do the same in spite of the odds. Other than passing balme and pointing fingers, what is the alternative? We only get to vote once every two to four years. We have to live our lives and run our businesses 24/7/365.

So let’s go out and do what we do with the helping hand of God.

Be blessed!

Craig W.
Thomas Paul, from Ohio

The issues at hand have to do with more than the banking market. Where was the government when all those jobs were being shipped overseas for pennies on the dollar in labor costs? I have people I know in the architectural and legal professions that have received e-mails from China and India to do the time consuming work for next to nothing. This is unheard of. Instead of looking at health care as our number one priority maybe the government should point the finger in the mirror and figure out how to get people back to work………….
tom p., Ohio
john martins

I agree with Pete, just about every one needs to share the blame:
Lets start with President Clinton who instructed banks and mortgage companies to come up with a way more people could buy a house and be part of the american dream, well, alot of people did not have any money for down payments and were not even able to pay down a mortgage the traditional way, thats when those funky low interest only mortgages came in to affect where you don’t need a down payment, look where that got us.

The banks and real estate brokers need to share in the blame for trying to make every one think that a low interest rate is the best thing since sliced bread, when you brake it down, the monthly payment for a $300,000 thirty year mortgage at 5% is $1610.40, the monthly payment for a $150,000 thirty year mortgage at 9% is $1206.90.

Like I said, some how home buyers were brain washed into believing that having a low interest rate loan is the best way to buy a house, since that has happend,every one rushes out to buy a house no matter how expensive the property may be just to beat a possible interest hike.

What we Americans need to do is start thinking for our selves instead of letting the Gov’t and banks do our thinking for us. Lets all stop acting like a bunch of sheep being led to the slaughter!

This post may sound crude, but thats OK, I’m not a politician,
I don’t have to be politicaly correct
Dan E. CALIFORNIA

Hank Paulson is to blame, he worked for Goldman Sachs and devised these crazy loans gone wild, that wasnt enough, he had to arrange for “certain” lenders to make them, knowing that they were no good, he then had to get them rated triple A by “certain” rating agencies so they could be sold to foreign investors. Until one day he requested the american suckers in the form of a 3 page tarp bailout request to bail out all those bad loans and in the process, sucked out trillions of equity and retirement money from the nest eggs of millions…he needs to be in jail
http://www.sayNOto4closure.com Jackie L., FL

We would not have this kind of mess if each person took a full responsibilty for one’s own decision and if each mortgage broker and lender conducted business with integrity.
Craig S.

What is quite clear is that this whole mess is due to unmitigated greed and incompetence. It is also clear that more regulation will be required. The executives of many banks and financial institutions have a “public be damned” attitude and still keep on rewarding themselves with astronomical salaries, bonuses and perks despite the fact they are causing major damage to their institutions and the general economy.

However, how can we expect any major overhaul when the people who help cause our country’s economic meltdown are the same ones who are lining the pockets of our Congressmen? Maybe we should start by replacing all current Congressmen with people who don’t have major ties to the financial industry and are willing to take some real action.

Craig S., California
Jim Czerniak

Who is at fault??, When you can take a mortgage and not care if it is good for the consumer or your company because all you are going to do is package it and sell it off, who cares.
Well this is one reason we are in the situation we are in. Today not many people care, as long as they are making money they don’t worry what their actions cause down the road for the people they “helped”. It’s not their problem.
http://www.linkedin.com/in/josephbmattheeussen Joseph B. Mattheeussen

Well, allot of really good thoughts brought out here, and some very interesting perspectives to enjoy, too…! Hello, Gentlemen, it’s Joseph from the ‘Republic of Connecticut’, (the Constitution state!) again, and the way I see it, the WORD of God says to ‘look upon your own House’ and to repent of your own sins first… He (Jesus) also says to ‘take the beam out of your own eye’ so that you can ‘see clearly to help to take the speck out of your brother’s eye!’ Which really says allot, especially when you see all of the ‘big wigs’, politicians and beaurocrats tossing around the blame like free cotton candy at a World’s Fair… The blame entirely lies at the feet of ”We the People’, since we’ve all allowed this to happen for that chance at a ‘free ride’ somehow…!
I sincerely hope and pray that ‘We the People…!’ come back to reality fast, as well as to their senses as a whole and see several things all at once;
a.) God is in control, He is to be honored and obeyed FIRST,
b.) We are ALL held accountable before God for how we re-late to and how we treat others’, how we love our brother as our selves, etc…
c.) We all, cumulatively and personally are one of ‘We the People.’ here in the USA…!’ So, we have to become FULLY responsible for ourselves and NOT depend upon ‘Uncle Sam’ for our homes, finances, education, provisions, and the like…
d.) We have both the Bible to teach and lead us on how to love God and our brothers, and
e.) We have the U.S. Constitution to faithfully uphold and to respect as the highest law of the land (after the Bible); there-bye dragging all of these ‘corrupt and tiresome’ federal and state ‘elected officials’ back into their ‘Constitutional cages’…
f.) We MUST all demand that they abide-obey the U.S. Constitution as it was written, word for word, from now on, or, we WILL impeach/fire each and everyone of them, until we get folks who will ONLY spend money for a very small government to protect and defend our precious Republic properly,
g.) To repeal any and all un-Constitutional laws that were passed in the last 100+ years, and to pass ONLY laws that are Constitutionally sound once again, no big business sponsorship, no public bailouts, no favors, no pork, no big government and unlimited spending, as it once was, a strictly VOLUNTARY government work force, etc., etc…
Julie P. Arizona

Spending a lot of energy and time blaming everyone else for what’s happened doesn’t solve anything. Yes, we should look at the past and learn from it… what worked , what didn’t. But the more time we spend blaming the less time and energy we spend looking for solutions. I’ve watched/read way too much gloom & doom reporting lately and 1 thing I do know is we can’t just blame the politicians, the banks or Freddie or Fannie. We must take responsibility for our own actions as well. I did ARMs and No Doc loans to buy houses to fix & flip. Then I lost the houses to short sales and foreclosure. But I chose to take out the loans. I chose to take the risk when I didn’t have enough in the bank to cover the risk. Now it’s time for me to step up to the plate and do whatever it takes to help bring myself out of the mire and anyone else I can help along the way. This is the perfect time.
Gordon T, New Hampshire

I think that the finger pointing and the blame that everybody wants to put on somebody else has to stop. It solves nothing, what’s done is done and we all have to move forward in our thinking and not dwell about what has transpired. If we want to move forward as not only a country but a civilization we all must work together and understand that we cannot accomplish anything alone.
http://Idon'thavemyownbusinesswebsite.com LeighAnnB, East Texas

Any personal or business relationship that is base on greed will fail. I too appreciate your acknowledgement of God and prayer. There are 10 commandments that are key to successful relations….even if you aren’t religious…they just make sense. The blame game is an easy pit to fall into. Glad to see a lot of people on this blog stepping up to the plate of responsibility.
http://thejoywilligroup.com Joyce W., Maryland

Cory, you stated “Our country has been going through a crisis for over a year.” I have to respectfully disagree with you and say our country has been going through a crisis for over several years. It hit us when we saw how bad the housing market had got. What I believe should happen is the finger pointing and blame should stop! It would be good if financial institution heads and Fannie Mae and Freddie Mac come together and devise a plan to restructure housing and mortgages without the government. The government should only referee if necessary and come up with penalties to keep them in line if their plan is not conducive to the consumer.
Terrell M., NC

I think there are many entities at fault for all this: banks, mortgage brokers, homeowners disregarding their true ability to afford a home, etc. This is just a few. It’s similar to American Idol fever! Thousands upon thousands of hopefuls audition in various cities, yet a handful are chosen. Could it be that the ‘thousands upon thousands’ have never been taught to follow their true passion or have never been told that singing really isn’t their gift? I’d dare say we’ve coddled, cajoled, and encouraged most of the hopefuls into believing they could sing vs. loving them enough to say they can’t!!

We all are to blame. Our greed and pride have played a major part in the housing demise. We’ve been told that home ownership is the American dream…but is it really? At what price??!! I think we’re counting the cost as we speak.
Charles (Chuck) H. California

Sounds like everyone continues to look for someone to blaim. I say, look in the mirror. We all know what our budets can handle, I’m tired f hearing how we were mis-informed, the small print was too small to read, etc…. You don’t put your signature on that contract without kowing the facts. Lets stop looking to blaim and concentrate on moving out of this situation. Only after we start looking forward instead of backwards can we truly begin climbing out of this whole, a whole we all had a hand in digging.
Tommy

Blaming anyone is never the answer to any situation. We are all at fault in one way or another. Any time we point a finger at someone, there are 4 more pointing back at me. I agree that the banking industry has had a lot to do with the current situation the country is in, but there are also a lot of other issues of equal importance. Creating money to bail them out is just as bad if not worse. By doing this, it only weakens the dollar value. Another blame, so to say, is the oil and gas companies, we have all experienced the higher prices at the pump, this greatly and immediately affects the average consumer and homeowner who is struggling. Another issue is our own pride. By this I want to talk about our own selfish desires. There have been many many people throughout time who barely scraped by and lived a very simple life without any luxuries. We have, in todays time, myself included, been guilty of living above our means. We buy things we really cannot afford, go places we can’t afford, we eat out instead of eating at home, we have more clothes, cars, bigger houses, more toys, etc etc etc than we have any need of. If we can pay cash for it, then fine, help keep the economy going. But if we have to live on credit cards at all to accomplish this lifestyle, then we are as guilty as some of the big companies that is taking the blame. That’ my point of view.
Tommy P., Kentucky
http://none Reid R., Colorado

Hi Cory,

Thanks for your thoughtful comments above. You’re right, it’s human nature to blame. I hadn’t thought before about looking at Fannie and Freddie as points of stability, but I think you have a good point there.

As someone commented here, we need to see how we can be part of the solution and not just talk about the problem. May God give us His wisdom and strength to do what we need to, since we certainly can’t on our own!

By the way, snowflakes also cooperate to make gorgeous landscapes, can be formed into fun snow people, and without them I couldn’t ski or toboggan…so what can be potentially destructive and deadly can also be a source of blessing, or enjoyment. It’s simply a matter of how we choose to look at life.
http://www.USellHouses.com Ever

I think everyone is to blame. However, I mostly blame the mortgage brokers. They were the front line of the banks interfacing with the borrowers.

People went to them to see if they could qualify for a loan and they didn’t care if you had money in the bank or not. They still would approved you, oh and if the house appraisal was too low they would send another appraiser to come back with a higher amount.

Wait you still haven’t sold your house yet. Just get a leasing agreement to show you are not liable for that expense. You see every step of the way brokers were bending rules and telling you how to get around them to get approved.

You see when someone wants to own a home, their first home, like many of the people losing them now. People will do anything to get it. They want their families to have something. The brokers told everyone, if you can afford it in 2 years when the rate adjusts, just sell it and at least you made some money on the appreciation.

Guess everyone was wrong.

Ever E., Florida
rose randolph

The money hungry builders and the banks are to blame. They all got together and decided to sell houses for $500 k when they are only worth $150k and then the banks decided to loan on these very overpriced houses with rediculus financing just so people who couldn’t afford the prices coud get into a new house, without thinking about three or five years down the road when the economy falls apart and they can’t afford the adjusted payment on a house they paid way toooo much for.
rose r, california
Liz A, Maryland

We are all to blame because we all agreed to pay the inflated prices the seller, and bankers wanted. We did not expect the bottom to fall out. That is the shame because if we were thinking rationally we would have known that this could not go on forever. We need to man up and come to a collective solution that will fix the problem and not just put a band aid on it
Mark E

I agree that all of us are o blame. The question stil lies in how do we fix this mess we got ourselves into. The government’s loss mitigation programmes have affectived forclosures negatively, creating a surge in forclosures. The finger in the dike approach, such as the Making Homes Affordable (MHA) modification programme does not work for people who were caught up in the boom and credit borrowing madness and now owe far too much on their homes. Another mass of forclosures are on their way.
This will create more opportunity for the investor, and getting these
distressed properties moving.
Time to stop blaming, and take action, as I am responsible, we are responsible (all of us), to continue to take action, getting these properties moving, and methodically, one property at a time get out of this mess.
It is also time, for me, us to stop living beyond our means and get back to the old school way of doing things financially. When in wealth, make sure all bill (overhead ), is paid first, pay yourself maybe 10%, and put the remainder of the money to the side.
sharie H, Arkansas

As I have said before Cory …Our country has been greedy and look at the mess they have gotten us in and I feel like if they used some of the money they will collect off of the Banks and/or Freddie and Fannie to recycle the market so to speak I think it may be able to hlp itself with us and Freedomsoft of course int he balance of things. But all that money needs to be re-directed to serve a good purpose..and that would be to straighten out the marketplace. Some one would be policing that since obviously they need a babysitter to be made accountable as well.

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