Who Is To Blame For Borrowers Taking Loans They Can’t Afford?

Ever since the mortgage crisis started in 2008, there has been a wide divergence in opinions on who was to blame for borrower defaults.  Many blame greedy bankers who abdicated sound underwriting principles for financial gain by approving mortgages for unqualified borrowers.  Others blame the borrowers themselves for being irresponsible and taking on debt that their income could not possibly support.

The debate on culpability continues, with opinions varying depending on how one views banker versus borrower responsibility.

The latest Fannie Mae National Housing Survey for the quarter ending December 31, 2010, highlights the diversity of opinions on the ongoing foreclosure crisis.  The National Housing Survey polled 3,400 Americans about the current state of the economy, the U.S. housing finance system and the amount of confidence in homeownership.

The Fannie Mae Survey asked all poll respondents to identify who was the most to blame for borrowers “taking out loans they can’t afford.”  Not surprisingly, a majority of delinquent borrowers blame the banks for approving loans that the borrower could not afford.

More than half of all respondents had the exact opposite opinion on the matter, with 55% blaming the person who took out the mortgage rather than the mortgage company.  Those respondents blaming the borrower felt that it was the borrower’s responsibility to know if they could pay their bills or not.

If the Obama administration’s proposal to engage in large scale principal reductions for delinquent borrowers gains traction, expect to see the same dichotomy of opinions on whether or not delinquent borrowers deserve special loan relief.