Mandatory Counseling should be required before a Mortgage is approved?

[Movin2CT]

Originally Posted by TwiloMike

Don't flatter yourself. It's not you the bank is trying to save by requiring you to take a home ownership class.

I never thought the bank would be trying to save me. Obviously it's a self-serving action. I personally would never use any bank that required me to take such a class. They have a right to require the class, and I have the right to take my business elsewhere.

Having the ability to pay doesn't mean that the people have much of a clue what they're getting themselves into when they are first time home buyers. Home ownership comes with a plethora of costs that many people don't research and are unprepared for even if on paper they make enough money. All the credit worthiness can quickly go to hell if people don't adjust their spending habits and priorities... and this something the class can explain.

Just as ability to pay doesn't mean someone has a clue what they're doing, ability to pay and pass a test still doesn't tell us if someone will be WILLING to pay. And that is the issue for many who find themselves with credit issues whether it be over real estate, cars, medical bills, credit cards, etc... (NOTE: this is a generalization. I'm not saying that their aren't people who get in over their heads through unforseen circumstances).

It's not only first time home buyers who get in over their heads. In the case of the current meltdown, there are a lot of people who had the "move up syndrome" involved. They took the equity from their first home, which they could afford, and rolled it over into a new home that they couldn't really afford, but were able to pay for with some "creative financing". They played Russian roulette with rising housing prices, and, as inevitably happens, were left holding the bag when the house of cards collapsed. As a society, we don't teach personal responsibility. Most homeowners have passed basic math. They know that in order to pay a bill of X amount, they have to earn Y. Unfortunately, society has made people think that if someone is willing to loan you the money, you must be able to afford it. It's like the old joke, "I must have more money, I still have checks."

My point is that you can send people to 100 classes. It's not going to stop those with an entitlement mentality from getting in over their heads anyway. If you have a product that people want bad enough, they'll find a way to get it, whether they should or not.

Of course! At the same time the banks are looking out for their interest (and as a side benefit it can improve society at large to have more first time home buyers walk into home ownership with eyes wide open).

And this is the purpose of qualifying people for loans. A class and a test isn't going to tell you how well someone is going to do in the real world. Walking into a transaction with their eyes wide open isn't going to make people take responsibility for their actions and/or honor their commitments and responsibilities. How many of us knew someone in high school who had great potential or was voted "Most Likely to Succeed" and didn't live up to expectations??? Tests obviously don't solve the problems.