Quick Take: Mortgage? What Mortgage?

• Email
• Share
• Print

I wish I could say this surprises me, but it doesn't. An interesting poll performed by Bankrate.com (Nasdaq: RATE) reveals some pretty disturbing realities about American borrowers. The poll, discussed in detail here, found that a full third of borrowers had no idea what kind of mortgage they held.

Worse yet, 58% of ARM borrowers had no idea what they were going to do when the rate ratchets upward. Thirty-six percent of respondents said they planned to refinance into a long-term fixed mortgage, but for many of these borrowers, that may be tough, given the new tightening of lending standards in the face of the fallout at subprimes like Novastar Financial (NYSE: NFI), New Century Financial, and Countrywide Financial (NYSE: CFC).

And, now ... Cue the victim chorus. Here's an example of the kind of bogus heartstring pluckers we can expect from the press. This Washington Post tearjerker carried a subhead reading "Economic Success Story Turns Sour ..."

"Economic success story turns sour"? How about the truth, Kirstin Downey? It runs more like this:

"Wishful thinking crushed by harsh reality."

Despite the spate of stories blaming mortgage brokers for foisting lousy loans on people with low incomes, I have a very hard time feeling sorry for anyone involved. Throughout this real estate bubble, there was rampant greed on both sides of lending desks. People who bet their economic well-being on fairy tales don't have much cause to complain when things turn out different.

Reality bites, but the nip is necessary.

Comments? Bring them here.

At the time of publication, Seth Jayson had no positions in any company mentioned here. See his latest blog commentary here. View his stock holdings and Fool profile here. Bankrate is a Rule Breakers selection. Fool rules are here.