Bank accidentally deposits $120,000 in couple’s account; they spend most of it, then get charged with theft

were trying to invest in real estate by buying houses they couldn't afford to either live in, flip them, or rent them out.

a) Do you have a good citation for the latter two (default rates on flips or rentals)? I was under the impression that the vast majority of defaults were on primary residences.

b) Don't you think the banks bear some responsibility for correctly assessing how much people can afford? I'm not trying to say loan holders aren't at fault at all. In fact I think they should bear the majority of the fault. But you really seem to be shifting all blame onto the mortgage holders, which I don't find entirely appropriate.

c) That is actually not why the recession occurred. It was one factor, but the bigger factor was the banks repackaging those mortgages and intentionally incorrectly assessing the risk associated with what they knew were high risk mortgages. They then said these mortgages were more valuable than they actually were, which allowed them to issue even more loans. So many loans that they weren't able to cover their losses when people started defaulting on their loans, at a rate they should have taken account for, but didn't. The real fundamental problem was intentional, widespread financial malfeasance in the banking sector.

Honestly, it seems like you have a fairly tenuous grasp of finances in general, and are giving advice based off of half-understood ideas. I don't fault your general idea though. People shouldn't have taken out loans they couldn't afford to pay back. That is a super risky move, and it ended up burning a lot of people. The problem is that it is all but necessary if you want to own a home in many locations. So, I mean, I still blame people for irresponsible spending practices, but at the same time I think I understand why many people did it. I don't think it is because of stupidity or any fundamental character flaw they have. It is a combination of poor financial decisions by home owners, a shitty housing market, poor lending practices by the banks, and the idea that has been pushed way too hard for way too long that home ownership is the ultimate investment/way to financial stability.

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