The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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From: Smiling Bob	8/25/2007 3:21:33 PM
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From 2003 Another miscalculation/case of faulty intelligence (was there ever a doubt this administration was fraught with "faulty intelligence"?) lewrockwell.com The percentage of Americans who own homes rose from 66.2 percent in 2001 to 68.6 percent in late 2003. But the foreclosure rate is rising much faster than the homeownership rate. The foreclosure rate for home mortgages has tripled since the early 1980s. The rate has especially “gone up a lot ... in struggling neighborhoods in big cities,” according to Federal Reserve Board governor Edward Gramlich. Zero-down-payment loans A month after signing the “Dream Act,” Bush urged Congress to permit the FHA to begin making zero-down-payment loans to low-income Americans. The administration forecast that such mortgages could be given to 150,000 home buyers in the first year. Secretary Jackson declared, Offering FHA mortgages with no down payment will unlock the door to homeownership for hundreds of thousands of American families, particularly minorities. Federal Housing Commissioner John Weicher said in January 2004 that “the White House doesn’t think those who can afford the monthly payment but have been unable to save for a down payment should be deprived from owning a home,” National Mortgage News reported. While zero-down-payment mortgages have long been considered profoundly unsafe (especially for borrowers with dubious credit history), Weicher confidently asserted, “We do not anticipate any costs to taxpayers.” The Bush administration aims to make more dubious mortgages, even though the percentage of FHA single-family home loans that have defaulted rose 54 percent between 1999 and 2002, reaching 4.25 percent. Roughly 12 percent of all FHA mortgages are past due. Avoiding making unsound mortgages seems to be the last item on HUD’s list of priorities. Weicher declared in January 2004, “We have been addressing our default rate, and we are now able to help half the families who go into default avoid foreclosure.” This merely suppresses the evidence of a failed policy and sticks taxpayers with a larger bill once the roof finally falls in.

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