“Loose lending practices seen during the housing bubble allowed 5 million renters to become homeowners …the market is in the protracted process of evicting this group.”- Bloomberg Businessweek
This statement offers much to think about. While it is true that all of us, at some point in our lives, make decisions that are not necessarily based on sound judgment, it is also true that we have the ability to think for ourselves. We are not victims of circumstances; we have the means and responsibility to seek to be better informed and to make decisions based on this knowledge.
Yes, loose lending practices played a role in the events that led to the current housing circumstances. We can learn from this. However, the lesson involves more than learning to establish better practices. The lesson must be more personal than this; it must involve higher standards of personal choices and personal assessment.
In the end, the market is not the first factor that moves the economy in one direction or another. The first step always begins with an individual. Whether it is the managers of financial institutions deciding on lending criteria, the loan officer interpreting these criteria and applying them to a borrower’s circumstances or the borrower himself, each of these individuals has a choice and the choice lies between greed, common sense and self-preservation.
This does not mean one has to forgo any sense of creative thinking in pursuit of the dream of home ownership; it simply means that integrity must drive the process. When integrity is at the forefront in the minds of home buyers, sellers, borrowers, loan officers and those who operate financial institutions, the creative process embarks on a whole different route. When integrity is at the forefront, loose practices are not possible because the mind is open and able to perceive a better path.
So, back to the quote I introduced at the beginning of this article. Home buyers must choose their own level of integrity and insist upon it. Ultimately, this may require compromises, patience and the ability to think outside of the box. Precisely, home buyers must take the lead to ensure a sensible process, much as a parent might take the lead to ensure proper shelter and care for their children.
Utopia? Why should it be? It is simply a variation on the theme. If lack of integrity and loose practices are possible now, it stands to reason that the opposite is possible as well. It is a matter of choice. Market trends truly inform the process, but they are not tailored to individual needs and reality.
Home buyers have the responsibility to insist on integrity from lending institutions, but also from themselves. By applying high standards of personal behavior, personal choice and personal integrity, we reflect back to institutions whose support we depend upon the level of integrity our relationship with them demands.