A reader writes:
I am a tax preparer in NYC and I deal with other peoples' money. Mr. Posner blames rates, government, fed, etc. I got a new customer last year. He told me that his house was foreclosed. I asked him:
"What is your income"
- I have no stated income. I work for cash.
- How much did you put down?
Or a home attendant with income of $30K who owns two houses in NYC each of them she bought for $450K. Or a car mechanic with a stated income of $45K who owns three properties: two in NYC and one in Florida which he rents. While the mortgage rate was 1.5% (exotic mortgages), they were able to handle the mortgages. But after the rates were adjusted, they can not afford them anymore.
I have only one question: who gave them the mortgages in the first place?
One more point. The interest rates were low for everybody. Why not all the banks are having these problems?. I do not think that privately owned banks are having these problem