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Comment by richardknop | Hacker News Reader

Yes it is partly their fault. Contrast people without sufficient income, who took huge mortgages with almost zero deposit and repayment amount too high for their income, to fiscally responsible people who didn't participate in the mortgage frenzy, instead trying to save more to afford bigger deposit / smaller mortgage in the future. The first group of people was bailed out by the second group partially. This is quite unjust.

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Your comment is simply saying: contrast people who participated in the real estate bubble with responsible people who did not. I agree that the second group suffered because of the first and that this is unjust. Whether we can expect people generally to not participate in market manias to avoid such a predicament, is another question.

If we keep making the maniacs whole after every crisis they cause, they'll never need to learn to avoid these predicaments.

I took a reasonable mortgage that my wife and I could afford, paid a standard 20% down payment and saw the "value" of my first home drop 50% post 2008. Am I stupid? Was that my fault?

The "boogeyman" borrower who borrowed millions, made no down payment and had 0 income rarely exists.

You took a risk. Taking a mortgage is not risk free. Prices of properties are not guaranteed to go up forever. We are in fact in huge housing bubble. Some people just rent. It’s not right to force renters to bail out people who took mortgages. Once this bubble bursts I hope we are not going to be bailing out mortgages again.

Personally I think 20% is a small deposit but better than what a lot of people are getting away with these days. You’re still taking a massive loan that you will be paying off for decades. You should only do such risk if you are ok with the property losing value. E.g. Only people buying their first house for family should ever take a mortgage if they have decided to live in that place for next 20-30 years. People buying second or third homes or flipping houses should be burned in mortgage crises, not bailed out, that’s immoral.

> saw the "value" of my first home drop 50% post 2008.

So what? Not every investment goes up, and even those that do go up rarely do so linearly. As far as your situation is concerned, who cares if the value dropped 50%. You were smart, bought something you could afford (presumably on a fixed rate), and just kept making the payments. Over the long term prices would come back.

The problem came in with people buying houses they could clearly not afford, and with no cushion for any downturn. They were not boogeyman borrowers, and were very common in places like Florida and Las Vegas. People who could only afford the teaser rate payment on a 3/1 ARM when fixed rates were at historic lows. Not a smart financial move on their part.

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