The American Dream

The Market is Working: “According to the Federal Reserve, the median net worth for homeowners was $184,000. The median net worth for renters was $4,000.”

This writer of the article linked above makes a very interesting observation. Before we go crazy trying to put blame and increase government regulation lets look at one of the basic reasons for the run up in subprime lending. Owning a home creates wealth – pure and simple. As I was searching for my first home my realtor said “you can make rent payments your whole life and you have a bag of receipts, you make mortgage payments and you’ve got money”. Most people understand this.

President Bush has made increasing the home ownership rate a priority. So, lenders went after the “final frontier”: the subprime market with a zeal. Read the above article carefully. It says 85% of credit challenged borrowers are current on their payments. This means despite past credit woes they have the opportunity to improve their credit scores, earn equity and create wealth. Isn’t a second chance what America is all about. So, let’s try to keep our heads cool about this subprime lending crash and try to look at it a bit differently!

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