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Losing Your Home

By Ralph Peters

The sheriff's-sale sign went up on our front lawn when I was in seventh grade. In the small Pennsylvania town where we lived, word traveled fast: My father had debts he couldn't pay.

A day or two later, the sign came down. Dad scraped together enough money to appease his creditors. We stayed in our 1950s rancher, if without a car for a time.

But the embarrassment of that sign on the corner of our lot--it seemed as huge as a billboard--stayed with me all these years. So I sympathize with the many families across this country who recently lost their homes or may soon lose them.

I don't feel blanket compassion for everybody. There's far less reason to commiserate with the gimme-gimme couples who just had to have a 9,000-square-foot house when 3k would've been plenty of living space.

But my heart's with the starry-eyed first-time buyers, with the growing families, and with the honest, if sometimes foolish, citizens who longed to own their own home and who trusted mortgage lenders whose "subprime" ethics set new industry lows.

Whether or not the old saw, "It is better to have loved and lost than never to have loved" has any validity, it's not better to have had your own home, only to lose it because you got suckered into a variable-rate, guaranteed-blindside, early-balloon-payment, no-money-down, Belgian-chocolate-sauce-and-free-BMW mortgage by a hustler whose only concern was making his or her numbers (we need a study of how many mortgage brokers have lost their own homes...).

I believe in personal responsibility and I don't think that government should step in and cover everybody's bills. Ultimately, those who make foolish decisions have to live with them. But I'm disgusted that, at a time when families face being put out on the street, the men and women who pushed those nutty loans face no penalties at all.

The suits knew better. They knew that those families weren't going to be able to make the suddenly soaring payments down the road. But that part wasn't their problem. They got their slice for closing the deal. Period.

Of course, it's easy for those of us who bought within our limits to feel smug. But readers on solid financial footing should try to imagine themselves in a young and growing family, faced not only with the absurd social pressures of our society to put on the pure-bred dog, but who just wanted a patch of their own grass where their kids could play in safety.

Home ownership is a fundamental part of the American dream. Whether it's a rough-around-the-roofline duplex or a mcmansion in the 'burbs, the home we provide for those we love is inseparable from our identity.

Those unscrupulous lenders love to do their sanctimonious riff and claim that their "innovative" loans provided a public service by enabling previously unqualified buyers to get their families into their own homes.

But they knew those families wouldn't stay in those homes long.

They knew. They knew. They knew.

I suppose my wiring's defective, but I can't understand how, for the sake of a bigger paycheck, any American could set a family up for the heartbreak of losing their home.

And let's be honest: We saw this crisis coming. Those too-good-to-be-true loans were always too good to be true.

A few years back, I spoke to a group of New Jersey businessmen--guys I just plain like--about the international situation. As usual, I also took a few minutes to talk about our own country.

Many in the audience were developers or builders. I warned them that their industry was headed for trouble, that the junk loans being made couldn't be sustained. A few got it, but most were doing far too well to have time for any bad news.

Most of us have been around long enough to live through multiple booms. We're always told that this time it's different, that this boom will never end. And every time the bills come due with the suddenness of a car door slammed on your fingers.

All those families who allowed themselves to be convinced that they should buy homes they couldn't begin to afford are paying a terrible price. I think of the humiliation of the fathers, the embarrassment of the mothers--and the shame of the kids who learn their first adult lesson, how easily a dream can become a nightmare.

And some of the scam-side lending institutions are paying. The rest of us may pay, too, as our retirement investments drop. But I'd like to know how many of the loan officers who approved outrageous mortgages are paying now. Are their homes on the auction block?

I doubt it.

So here's my simple proposal: Pass a law that makes the lending officer who approves a mortgage personally liable for a $ 10,000 fine if the borrower defaults within five years. In plain English, if you set folks up to fail, you pay.

Won't happen. I know that. The scoundrels who screwed all those families have already been promoted.

But this disgraceful mess means more to me than just a wobbly stock market or a dip in home prices. It's about some kid crying his eyes out in his room because a sign just went up on the front lawn.

Ralph Peters is a retired Army officer, a strategist and columnist, and the author of the new book, Wars Of Blood And Faith, The Conflicts That Will Shape the Twenty-First Century.”

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