In the rampant finger-pointing that has characterized the country’s current mortgage crisis, homeowners have come in for their share of the blame. Indeed, much of the punditry and backyard-fence gossip has focused on the misguided financial decisions that landed so many people in troubles seemingly of their own devices.

But absent from the debate is the underlying and undeniable reality that not all of today’s troubled homeowners landed in dire straits through the same poor choices. Rather, the degree of bad fortune versus self-inflicted misery varies just as much as the individual stories do.

These distinctions are important because government aid, lender forbearance and even social sympathy tend to be doled out on the basis of merit. The assumption that all homeowners are equally worthy of such benefits ignores this basic tenet; and that oversight can result in too-generous giveaways for folks who tried to game the system and inadequate support for people who were truly victimized or caught in a downward spiral of unforeseeable ill fortune.

Consider these three tales:

Mary Jo Quay, a Realtor with Counselor Realty in Edina, Minn., described a woman who wanted to refinance her mortgage to take out $25,000 of equity to pay off other debts. The loan officer promised the cash, but never provided a good-faith estimate; and when the homeowner arrived at closing, she discovered a check for only $14,000 and a new loan that cost $6,000 in fees and had an interest rate of nearly 9.9 percent, according to Quay’s account. Desperate for the funds, the homeowner, perhaps foolishly, signed the paperwork. Later, she became ill and lost both of her jobs.

“Many of my clients don’t speak English, and they haven’t a clue that they have any rights,” Quay wrote. “There is no easy answer. We all have a lot of work to do before there is a turnaround.”

Next, a recent New York Times story, “Mortgage Crisis Spreads Past Subprime Loans,” described a couple who paid $275,000 to buy a home in Northern California in 1995. They repeatedly refinanced their mortgage to extract cash, which they used to buy stock in companies that subsequently failed and to finance their daughter’s college education. Today, they owe $740,000. They can’t refinance again because the debt is now more than their home is worth. Nor are they able to make the payments on their 2004-vintage adjustable-rate mortgage, despite a six-figure income. In fact, they may file for bankruptcy to escape the debt, according to the story.

Susan Jacobs, broker/owner of Assist-2-Sell Jacobs Team Buyers & Sellers Realty in Manassas, Va., has little sympathy for homeowners who, she wrote, have “sucked out all the equity they had in their property so they could buy that new car or fancy furniture.”

“Where are all the people who take responsibility for their own financial decisions?” Jacobs wondered. “What happened to the days when, if you had financial difficulties, you got another job, ate hot dogs for dinner and watched movies at home?”

Finally, a homeowner who didn’t want her name to be printed wrote to share one of her “many thoughts on this walk-away-from-the-home mentality”:

“I am a home owner who does have equity, but also has a good amount on my home equity line of credit, who is wondering: Why not take all the credit line and buy a new home and walk away from my older home? I believe that I would benefit because I will make a few hundred thousand easier in three or four years, and then I would buy a house outright out of state. I guess I don’t care weather (sic) my credit score is good or not because I would still be ahead of the game.”

That speaks for itself, doesn’t it?

Meanwhile, most of the 128 million households in the United States remain largely unaffected by the mortgage crisis because they are renters, they own their homes outright or they have a comfortable mortgage they can afford to pay, typically by making other financial sacrifices. Whether these folks will feel much sympathy for such tales told by their neighbors as the crisis unfolds depends not only on the magnitude and extent of their pain, but also on their personal circumstances and the specific details.

The moral questions may be especially pertinent and poignant for real estate professionals, many of whom now hear these types of stories on a daily basis.

As Quay concluded: “Before we point fingers, we have a lot of soul searching about what our job is, and how it affects the community at large.”

Marcie Geffner is a real estate reporter in Los Angeles.

Copyright 2008 Marcie Geffner. All rights reserved. No part of this article may be used or reproduced in any manner whatsoever without written permission of the author.

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