Yes, the same irresponsible lending practices which led to the real estate crash are coming back. With help from the federal government, of course:
The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.
President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.
In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.
Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.
I’d say “they’ve got to be kidding!” except it’s not satire.
It’s the Obama administration.
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2 responses to “Let’s turn the real estate recovery around!”
[…] First, here’s Obama and the Dems trying to turn around the looming real estate recovery. […]
Well, to be fair, the Feds also spent decades and vast sums of money creating the real estate bubble in the first place.
Once upon a time, families had to scrimp and save for years to come up with the down payment for a house. And Government looked upon this, and said it was wrong and unjust. And Fannie Mae and Freddie Mac handed out vast sums of free money to middle-class would-be real estate speculators. And since demand increased–the amount of money in the marketplace, that is–yet not one additional square inch of land was created (it seems they don’t make new land any more), housing prices, amazingly, rose. And American families still had to scrimp and save for years to get together the money that, plus big fat welfare checks from Uncle Sugar’s friends Fannie Mae and Freddie Mac, could add up to the down payment on a house. And the price of housing–not merely owning a home, but also renting shelter–went up, up, up, up, up, seemingly without end or limit. And the government wrote more blank checks to deadbeats and fools who’d speculated in real estate and were unable to make the payments, under the “Making Homes Affordable” Act and other assorted welfare programs. And the price of housing went up, up, up. This distorted, artificial market inflated the price of housing, absorbing every dollar the government could print and toss into its gaping maw. This made landlords and real estate speculators very happy, for a while.
And there were FHA housing loans at artificially low interest rates, which were made to large numbers of deadbeats. And then in 2006 Barney Frank decided that under his new interpretation of the Community Reinvestment Act of 1977, credit was now a “civil right,” whatever that term even means. And so he held the entire banking industry at gunpoint and forced Affirmative Action quotas in lending upon them, forcing them to give a trillion dollars in housing loans to unemployable crackheads. The consequences were predictable, predicted, and almost immediate. When the real estate market cratered, it was “Bush’s fault,” and the fault of “greedy Wall Street bankers” whom the government had held at gunpoint and forced to loan a trillion dollars to illiterate crackhead deadbeats, which is apparently a “predatory lending practice.”
And so for a year or two the price of housing in some markets dropped a bit–not rent, mind you, rent always goes up, but the price to get into a home was, for a while, dropping down to what a free market might have supported (note that a century ago, the average American working family paid about 15% of its income for shelter, rather than more than half), and keep in mind that the Constitution’s list of enumerated powers does not include authorization for the Federal government to interfere with the real estate market. Rather than let well enough alone, the government keeps on printing these welfare checks for rich kids, trying to pump more air back into the deflating housing bubble.
One must laugh, because the alternative is to scream.