Keeping Your Piece of the American Dream

Let’s stop blaming the people who took the bait (and switch) and thought they’d landed their piece of the American dream. Home ownership has always been a goal of most Americans. Who could resist an offer to make that dream affordable?

Playing the Real Estate Game

Essentially, that’s what happened to millions of families who took out a significant portion of the $1.3 billion subprime mortgages outstanding today. Sure, some of those loans were taken out by scam artists, who had no intention of owning the homes for long. Others figured on "flipping" the property at a higher price to the next dreamer. They had a good example: Everyone from Donald Trump to graying yuppies had been playing the latest national "get-rich-quick" scheme -- buying and selling residential real estate.

But when the dust settles and all the blame is cast, it's very likely that the real losers will be the families who were attracted by ads run in newspapers and on local radio by mortgage brokers who promised low monthly payments, no money down and a chance to buy the dream house financed only by dreams.

The Path of Greed

Fully 52% of subprime loans were originated by nonregulated mortgage brokers, who fall through the cracks between federal and state regulation. As originators, they presented the contracts, which were then underwritten by small mortgage companies. The individual mortgage brokers received a cash fee for every loan they originated.