There has been a lot of talk in recent months about the number of people in this country who are now losing their homes to foreclosure. These home owners usually have some sort of "short term Fixed ARM" (these are adjustable rate mortgages where the starting interest rate is fixed for the first 2, 3, 5, or 7 years) or some sort of "Option ARM." These home owners are finding that their interest rate is now beginning to adjust and that they can no longer afford the monthly payment. They also find that refinancing their mortgage is not an option due to poor personal credit/rising credit standards, lack of equity, etc, and as such they fall behind on their payments and, are in time, foreclosed on.

Now as often happens when something hits the open market that bites consumers in their backsides, there are many calling for increased government control over the mortgage industry. These calls are from people who want the government to protect home owners from unethical mortgage brokers and loan officers who supposedly "forced home owners into mortgage programs that were not beneficial to the home owner." Now while I completely agree that there needs to be a universal licensing standard for mortgage brokers and loan officers (similar to the way real estate appraisers are licensed), I cannot, in good faith, agree with any more government involvement beyond that point. The reason behind this (for me at least) is two fold. First is my personal belief that government cannot be effective in running just about anything and the less involvement government has in our daily lives, the better.

Second and most importantly, is that further government rules and regulations in the mortgage industry will not solve the problem. The problem being that many people are currently in mortgage programs that are not the best for their financial needs and situations.

The sad truth of the matter is that mortgage brokers and loan officers who want to scam or mislead home owners are always going to find a way to do so regardless of whatever new rules and regulations are put into place.

So who is the ultimate person responsible for a home owner's financial needs? Who is the first and best line of defense against those who would scam and mislead home owners into making bad decisions about their mortgage?

The answer to these questions is, of course, the home owner.

The only real way to solve this growing problem of people losing their homes and putting these unethical scam artists out of business for good is to create a better educated and more informed clientele base. In short, we've got to get back to teaching the people of this country basic economics and then once they have that knowledge the people of this country have to take it upon themselves to learn a little financial responsibility.

The fact that this forgotten subject of economics is no longer taught in many of our schools has produced a population where as many as 6 or 7 out of every 10 adults cannot even perform the simple task of balancing their check books. Many adults have no concept of financial responsibility or don't understand how to balance their household budget, the seriousness of terms in repaying a debt, or the principals of supply and demand. Is it any wonder that these people allowed themselves to take on mortgages where they didn't understand the terms or that they could be taken in by scam artists looking to make a quick buck. And for many adults, this lack of knowledge is not something they are doing on purpose. It is simply due to the fact that these basic economic concepts have never been introduced into their lives.

Now this is not to say that the mortgage industry doesn't share a large chuck of the blame. The average loan officer will never once think to take the time to educate a borrower on the terms of a mortgage program or explain (in dollars and cents) what it will mean for that borrower's budget. Likewise, the sheer numbers of sub-prime lenders who were writing loans for borrowers that they knew could not afford those loans are to be given a lot of the blame. When I hear of another sub-prime lender who has closed their doors, I find that I can't feel sorry for them because they have brought on themselves. Another problem the mortgage industry has to deal with is the fact that many states do not require anything to become a loan officer. Nor do many brokers provide any kind of training for these loans officers who are hired off of the street with no experience or knowledge about the mortgage business.

Bottom line is that there are problems to overcome in dealing with increased foreclosure rate in this country, but the answers are easy to see. First put a universal licensing requirement in place for the mortgage industry so that all mortgage brokers and loan officers across the country have to adhere to the same standard. Secondly and most importantly, we have to start teaching economics 101 again. Making sure that the people of this country have the basic knowledge of balancing and living on a budget, supply and demand, the value of a dollar, etc, is the only way for customers to be protected from costly financial scams and mistakes.
                                                                                                                                                            
                                                                                                                                                                John Worley
                                                                                                                                                   www.rtlgeorgia.com