Stupidity Overheard

I won't way where this was overheard, but it's all true:

Person 1: "I don't know what I'm going to do next year when my interest-only loan adjusts. I won't be able to afford the new payment."

Person 2: "If Barack Obama becomes president he'll extend your loan so it won't be a problem."

The conversation involved more than just those two, and each of them admitted that they wouldn't have gotten their loans if they hadn't "fudged" some things on their applications. More than just Person 1 was facing upcoming problems.

If you want to know what's wrong with the home loan market and why institutions are failing, all you have to do is look at that conversation and multiply it millions of times over.