High Def Forum - Your High Definition Community & High Definition Resource - View Single Post - You can blame the government and Bush for the house bubble!

NewLCD123 · 01-06-2009, 06:12 PM

Comment by Professor Bear
2009-01-05 08:29:26

SD Union Tribune
Homeownership goals created house of cards
Lender guidelines were ‘obliterated’ in buying frenzy
By Emmet Pierce
12:56 a.m. January 5, 2009

Government long has promoted homeownership as a means of strengthening communities and building the wealth of its citizens, but the recent housing market collapse has some analysts wondering whether consumers have gotten too much of a good thing.

While federal policies helped tens of thousands of U.S. consumers achieve homeownership during the housing boom, they also opened the door to the widespread use of risky loans, a national credit crunch and a wave of foreclosures.
…
Healing the economy was what U.S. policymakers had in mind when they were looking for ways to boost homeownership in 2001. The nation was in a slump amid the bursting of the dot-com bubble and the Sept. 11 terrorist attacks. To get back on track, then-Federal Reserve Chairman Alan Greenspan decided to lower interest rates.

Homeownership became a key driver of the economy. Federal regulators did not intervene when lenders began using subprime, adjustable-rate mortgages to temporarily reduce mortgage payments, allowing more people to qualify for loans.

Thousands of borrowers became homeowners without regard to their creditworthiness or their ability to cope when adjustable mortgages reset at higher rates. Because such loans carry higher fees, lenders made more money.

Attempts to pass federal legislation against predatory lending to protect borrowers from being placed in unnecessarily costly loans were opposed by the Bush administration and members of Congress. They feared that restrictions on lending would slow the rise of homeownership.

Instead, the housing market heated up as lenders and consumers went on an easy-credit bender. Highly leveraged loan products surfaced that had not been widely used since the Great Depression. At the height of the home-buying frenzy, a running joke in the lending industry was that anyone who could fog a mirror could get a loan.

In mid-2002, President Bush urged lenders to add 5.5 million minority homeowners by the end of the decade. In the years that followed, San Diego County neighborhoods with large minority populations would be hard-hit by foreclosures resulting from risky subprime loans.

Government-sponsored mortgage giants Fannie Mae and Freddie Mac ensured that funds were consistently available to lending institutions. Under pressure from the Bush administration, Fannie Mae and Freddie Mac increased their funding of mortgage loans to lower-income borrowers.

If government and lenders pushed hard for increased homeownership, it was with good intentions, said Dustin Hobbs, spokesman for the California Mortgage Bankers Association.

“You definitely had, for generations, presidents from both parties and congressmen from both sides really pushing homeownership, with Fannie and Freddie and every way they could, and with good reason,” Hobbs said. “It is the best way that individuals acquire wealth. There was a consensus from consumer groups to mortgage bankers to government that more needed to be done to create homeownership.”

Not everyone bought into the idea that owning is preferable to renting. Some contrarian economists held that people could build more wealth by renting and investing the money that would have gone into down payments and home maintenance.

They pointed out that home prices fluctuate. People who buy at the peak of a fevered market run the risk of losing wealth during a speculative price bubble.

“What is wrong with renting?” asked economist Christopher Thornberg of Beacon Economics. “I am so tired of hearing that owning a home is the height of being an American.”

Comment by SDGreg
2009-01-05 09:26:08

“If government and lenders pushed hard for increased homeownership, it was with good intentions, said Dustin Hobbs, spokesman for the California Mortgage Bankers Association.”

Utter crap about the “good intentions”. Government got more tax revenue and lenders got commissions. It was all about the money. Any social good was purely incidental.

““You definitely had, for generations, presidents from both parties and congressmen from both sides really pushing homeownership, with Fannie and Freddie and every way they could, and with good reason,” Hobbs said. “It is the best way that individuals acquire wealth.”

Since when is losing $x00 K the best way to acquire wealth?

My comments: There are some people that are better off renting for life or till retirement. Not everyone can own a house as we have seen. Some people don't have the credit, money or responsibility to be owning a house and if we lower our standards to get those fools to qualify, we create bubbles. Then those people just end up defaulting anyway. This grave error hopefully will be remembered by several generations and hopefully I will not see this again in my lifetime.

01-06-2009, 06:12 PM	#1
NewLCD123 82" 3840x2160 LCD Join Date: Oct 2008 Location: FL, leaving for NW PA Age: 27 Posts: 406	You can blame the government and Bush for the house bubble! Comment by Professor Bear 2009-01-05 08:29:26 SD Union Tribune Homeownership goals created house of cards Lender guidelines were ‘obliterated’ in buying frenzy By Emmet Pierce 12:56 a.m. January 5, 2009 Government long has promoted homeownership as a means of strengthening communities and building the wealth of its citizens, but the recent housing market collapse has some analysts wondering whether consumers have gotten too much of a good thing. While federal policies helped tens of thousands of U.S. consumers achieve homeownership during the housing boom, they also opened the door to the widespread use of risky loans, a national credit crunch and a wave of foreclosures. … Healing the economy was what U.S. policymakers had in mind when they were looking for ways to boost homeownership in 2001. The nation was in a slump amid the bursting of the dot-com bubble and the Sept. 11 terrorist attacks. To get back on track, then-Federal Reserve Chairman Alan Greenspan decided to lower interest rates. Homeownership became a key driver of the economy. Federal regulators did not intervene when lenders began using subprime, adjustable-rate mortgages to temporarily reduce mortgage payments, allowing more people to qualify for loans. Thousands of borrowers became homeowners without regard to their creditworthiness or their ability to cope when adjustable mortgages reset at higher rates. Because such loans carry higher fees, lenders made more money. Attempts to pass federal legislation against predatory lending to protect borrowers from being placed in unnecessarily costly loans were opposed by the Bush administration and members of Congress. They feared that restrictions on lending would slow the rise of homeownership. Instead, the housing market heated up as lenders and consumers went on an easy-credit bender. Highly leveraged loan products surfaced that had not been widely used since the Great Depression. At the height of the home-buying frenzy, a running joke in the lending industry was that anyone who could fog a mirror could get a loan. In mid-2002, President Bush urged lenders to add 5.5 million minority homeowners by the end of the decade. In the years that followed, San Diego County neighborhoods with large minority populations would be hard-hit by foreclosures resulting from risky subprime loans. Government-sponsored mortgage giants Fannie Mae and Freddie Mac ensured that funds were consistently available to lending institutions. Under pressure from the Bush administration, Fannie Mae and Freddie Mac increased their funding of mortgage loans to lower-income borrowers. If government and lenders pushed hard for increased homeownership, it was with good intentions, said Dustin Hobbs, spokesman for the California Mortgage Bankers Association. “You definitely had, for generations, presidents from both parties and congressmen from both sides really pushing homeownership, with Fannie and Freddie and every way they could, and with good reason,” Hobbs said. “It is the best way that individuals acquire wealth. There was a consensus from consumer groups to mortgage bankers to government that more needed to be done to create homeownership.” Not everyone bought into the idea that owning is preferable to renting. Some contrarian economists held that people could build more wealth by renting and investing the money that would have gone into down payments and home maintenance. They pointed out that home prices fluctuate. People who buy at the peak of a fevered market run the risk of losing wealth during a speculative price bubble. “What is wrong with renting?” asked economist Christopher Thornberg of Beacon Economics. “I am so tired of hearing that owning a home is the height of being an American.” Comment by SDGreg 2009-01-05 09:26:08 “If government and lenders pushed hard for increased homeownership, it was with good intentions, said Dustin Hobbs, spokesman for the California Mortgage Bankers Association.” Utter crap about the “good intentions”. Government got more tax revenue and lenders got commissions. It was all about the money. Any social good was purely incidental. ““You definitely had, for generations, presidents from both parties and congressmen from both sides really pushing homeownership, with Fannie and Freddie and every way they could, and with good reason,” Hobbs said. “It is the best way that individuals acquire wealth.” Since when is losing $x00 K the best way to acquire wealth? My comments: There are some people that are better off renting for life or till retirement. Not everyone can own a house as we have seen. Some people don't have the credit, money or responsibility to be owning a house and if we lower our standards to get those fools to qualify, we create bubbles. Then those people just end up defaulting anyway. This grave error hopefully will be remembered by several generations and hopefully I will not see this again in my lifetime. __________________ Member of the abstinence and antisex club I have been teaching abstinence since I was a young teen. More than 75% of the shocking facts I learned weren't even mentioned in school! Mating causes brain hemorrhages!