Household word now: Foreclosure

What goes up must come down — and when it does, pointing fingers tend to abound.

Many of these fingers currently are pointing at homeowners who took out subprime mortgages because the deal seemed so sweet: Big house, little money down; enjoy now, pay later.

As with credit cards, these loans proved too hard to resist and too easy to come by for too many. As a consequence of these too-good-to-be-true loans, last year’s foreclosure numbers soared to more than1 million, and Congress recently passed a bill aimed at stopping the hemorrhage.

But how could Americans be so gullible, so heedless?

“We’re all in favor of personal responsibility, but this is not all on the shoulders of the American consumer,” says Sheri Parks, associate professor of American studies at the University of Maryland in College Park. “Let’s look at the context.”

In the first half of the 20th century — before the ubiquitous credit card became what it is today — it was more difficult to spend money one didn’t have. Now, just about everyone can get a credit card — even college students who have no income — and spend money they don’t have, any time of day or night.

“You can buy a car without getting off your couch,” says Stuart Vyse, author of “Going Broke: Why Americans Can’t Hold On to Their Money.”

Nowadays, it takes very little effort either physically or mentally to buy big-ticket items, which does something to our decision-making process, says Mr. Vyse, a psychology professor at Connecticut College in New London, Conn.

It used to be — before the Internet, credit cards and bucket loads of catalogs and other direct mail — that people got a break from consuming once in a while. They got home, and they were primarily “domestic people,” not consumers. That was then, this is now. Today, Americans are consumers, 24/7.

“Thirty years ago, before credit cards were widely used, it was so much easier to be good,” Mr. Vyse says. “Now, there is no time for your inner self to say, ’Maybe this is not the thing to do.’ ”

Same thing goes for banks and other lenders in the subprime mortgage crisis. They made loans available quickly and readily to people with bad credit and no savings, and many consumers went for it — probably thinking that “if the bank thinks I’m good for it, I must be,” he says.

“When they do [preapproval calculations], they ignore a lot of what’s going on in your personal economy,” he says. “They’re expecting you to take those things into consideration.”

Ms. Parks says she had an eye-opener or two when she and her husband went house hunting a few years ago.

“We were shocked at how much the real estate agent told us we could afford,” she says.

So the credit and banking industry as well as individual homeowners receive a pointing finger each. But there are more factors — ranging from cultural and psychological to governmental and financial — at work.

For example, the very idea that our identities are tied to our possessions; that we express ourselves through what we buy, not who we are or what we create.

“People are more likely to express themselves with what they buy than by writing poetry,” Ms. Parks says.

Then there’s the American dream — in which buying one’s home ranks high — that everyone wants a piece of whether they’re financially set up to do so or not.

“The pain is put off until later,” Mr. Vyse says. “And with revolving credit and minimum payments, that’s even more true.”

Then there’s the American psyche — the idea that things will get better, not worse, in the future. Pay just a tad now and then when that great job with the gigantic salary rolls around …

“We’re positive — we have a good outlook on things — for good and bad,” Ms. Parks says.

When the great job doesn’t appear, there is always (in an up-market at least) the house to fall back on, and many in the past few years used their homes like ATMs, taking out money through home equity lines of credit to pay off bills and for whatever else they wanted cash.

“The problem, of course, is that the debt is real, but the housing market fluctuates,” Mr. Vyse says.

Then there are the mixed messages from government. Many Americans soon will receive a check for $600 or more in the mail, part of the package Congress recently passed aimed at stimulating the economy.

“Our government wants us to spend that money to stimulate the economy,” Ms. Parks says, “but wouldn’t it be more prudent to pay down debt?”

So, might the elephant in the room be the fact that the American economy is somewhat dependent on Americans making less-than-wise choices — buying on credit, spending instead of saving and overextending on homes?

Says Mr. Vyse: “Yes.”