Thanks for taking the time to comment. I think you misunderstood the point I was trying to make, and perhaps this example was not the best of examples as it touches so many close friends and family in our immediate circles.

But when your mortgage liability is being held by a pension fund in a town in Northern Europe as opposed to by your local banker or other person in your immediate community, it takes away a lot of the local accountability that you find in closed communities. And the fact that deceiving bankers or representatives of those bankers infiltrated local communities just makes the point that in this case the community was non-existing or very weak.

Again, this was not meant as a debate about the mortgage crisis, but rather on the impact of communities on buying behavior.

Let me use another, and less emotionally laden example, that I ran into during an animal documentary last night (sorry I do not remember the program’s name nor the channel). It showed how in nature the hierarchy within monkey communities is based on very complex social rules and interactions. When you take those monkeys out of their habitat and you throw 5 random ones into a cage, a hierarchy will establish itself as well – but this one will be based on relative aggressiveness only. So when you weaken the social norms of communities, or when you eliminate the community all together, the behavior of members change. And in the case of humans, where buying behavior is intrinsically intertwined with social norms, the buying behavior will change radically as well…

That’s all I was trying to point to…

From the experience of friends, and what has been reported in some news reports re subprime mortgages, many people found out about subprime brokers via word of mouth–as in “I know this great lady who can get you a fantastic deal on a mortgage. If you don’t understand it, that’s ok. She’ll do all the paperwork for you and make sure you get it.”

Many subprime lenders were operating out of small offices or home offices, serving as brokers for larger groups, and preyed on low to low-middle income folks who might have been refused mortgages from traditional banks for one reason or another. Wanting the “American Dream” so badly, they were willing to go outside traditional banking channels to get it.

And it was word-of-mouth from well-meaning friends and relatives that got people into those offices because many of the brokers never advertised.

And it’s rather inaccurate (as well as cruel) to say people don’t have feelings about defaulting on their mortgages. Many have lost life’s savings because they didn’t understand what was going on and trusted community word-of-mouth. They aren’t walking away without regret–they have huge regret and huge pain, having lost their “American Dream” and will suffer consequences to their credit for years to come.

The only ones who won’t suffer are many of the subprime brokers, who are now out of business and can’t be found by the Better Business Bureau or Chamber of Commerce.

So, you might even say that it was community–well-intentioned but ill-informed–that aided the mortgage meltdown.