There has been much talk about the "moral hazard" of bailing out foreclosed homeowners. However, many struggling homeowners are relatively unsophisticated...

There has been much talk about the "moral hazard" of bailing out foreclosed homeowners. However, many struggling homeowners are relatively unsophisticated. They undertook risky loans initiated by fly-by-night loan originators who were, in many cases, unregulated by federal or state governments.

In my practice, I see low-income farm workers losing their homes.They took risky loans that they weren't able to evaluate properly. Edward M. Gramlich, a former Federal Reserve official asked: "Why are the most risky loan products sold to the least sophisticated borrowers? The question answers itself -- the least sophisticated borrowers are probably duped into taking these products."

There hasn't been a mortgage meltdown before. Homeowners assumed all was well and that the lending institutions they dealt with were playing by safe and clearly established rules. Even more sophisticated borrowers assumed that the federal government, with its burdensome and stringent regulatory oversight of publicly traded companies, was applying the same strict scrutiny to the financial markets. After all, was it possible that the mortgage industry was being left to its own devices to prey on the unwary?

Lawyers, real estate agents, security brokers and countless other occupations are regulated. How could mortgage brokers be left unregulated and unlicensed and allowed to wreak billions of dollars of damage to unsuspecting homeowners and to the economy?

Is there a "moral hazard" in protecting the unsophisticated and unwary? These homeowners are just now learning what they got themselves into. It's time that the debate focus on undoing the damage wreaked by an unregulated mortgage market.

There is no moral hazard in helping struggling homeowners duped by a system they unwittingly trusted.