Posted on 08/31/2013 9:04:14 AM PDT by whitedog57
Between Jimmy Carter’s Community Reinvestment Act (CRA) and Bill Clinton’s National Homeownership Strategy (NHS), government encouraged lenders make risky loans, homeownership rates are back where they started in 1996. nhsdream2
The goal of Fannie Mae was a 70% homeownership rate. They almost achieved their goal — they got to 69% in 2004.
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The home ownership rate increase corresponded with an almost two-fold increase in the GSE affordable housing goals after the National Homeowhership Strategy was declared in 1995.
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Of course, this “great leap forward” in home ownership was not sustainable.
The racial makeup of home ownership shows a similar pattern. White home ownership peaked in 2004 at 76.0%, black home ownership peaked at 49.1% in 2004 as well. Hispanic home ownership later at 49.7% in 2007.
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In fact, black home ownership rates are lower now than where they started in 1996 with the National Homeownership Strategy!
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After the housing bubble burst and financial meltdown, Congress and regulators sought to tighten lending (Dodd-Frank, Consumer Financial Protection bureau, etc), but the affordable housing lobby in conjunction with their friends lobbied intensively to loosen credit standards … again.
Now, the Qualified Residential Mortgage revision removes the 20 percent down payment requirement that was put into place to prevent reckless lending.
So, as I predicted with the passage of Dodd-Frank, lobbyist forces will undo restrictions on risky lending and the tax payer are at risk again. Ed DeMaro, the tight fisted regulator at FHFA (the GSE regulator) will likely be replaced by Mel Watt, a Democrat and member of the Congressional Black Caucus.
I sincerely hopes Mr Watts notes that the “great leap forward” in home ownership failed and that blacks were hurt the worst.
Realtors, home builders and lenders will likely rejoice in the loosening of credit standards … again. But try to ignore the siren’s call of loosening standards.
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I’m sorry, people who just barely make mortgage payments for a few years and don’t build up capital are still renters. It isn’t their home yet.
Forcing loans to people who, as a group (by virtue of their credit ratings) are unlikely to repay them isn’t going to give them pride of home ownership, and is bound to re-crash the financial system in the future.
There is a natural percentage of home ownership which will work over the long term—maybe it’s in the low 60’s, possibly in the 50’s.
Our government has learned Zero from recent events. And Zero is who we’ve got at the helm.
It’s bound to work this time!! Sheesh
Like the “Great Leap Forward” reference.
BTW, that is what they keep saying about Communism.
Yep. Covering yourself in gasoline then igniting it and living without injury will only work if you are smarter than all those people who tried it in the past. Well I need to go now. I am going to go stand on the railroad track and jump 11:30 freight train as it bears down on me. Timing the jump is critical.
“Insanity: doing the same thing over and over again and expecting different results.”
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