Has the belief that we, as American, have a God given right to own a homes caused the mortgage crisis?

Top incoming search terms for this post

One Response to “Has the belief that we, as American, have a God given right to own a homes caused the mortgage crisis?”

1. CrustyCurmudgeon on: 28 July 2009 at 8:41 am

   No.
   The mortgage crisis is a result of the securities industry looking for new investment opportunities and deciding to make aggregated mortgages a security (securitizing debt). Large numbers of mortgages were aggregated, and were sold as securities, much like corporate bonds. What went incorrect with this scheme was that no one was responsible for vouching for the credit worthiness of the borrower, and no one was regulating the sale of these financial instruments.
   Many loans had low introductory rates, and subsequent rate increases in a couple of years that could literally double the mortgage payment. These loans were granted to persons with both low income and low credit scores. When house payments started to increase from 50% to 150%, above the initial payment amount, they became unaffordable to the borrowers. Defaults followed, which lessened the value of the "securitized" mortgages. While a lot of the ensuing write-downs were based on herd instinct, the defaults on mortgages that were part of the security instruments did lessen the prospective return for investors. Panic and chaos ensued.

   There will be persons of wealth who benefit from the resulting decrease in real estate values. I personally know people who are buying up premium properties for resale in a couple of years. Also, the market dynamic does increase demand for rentals, and many people are investing in value rental property. But the problem isn’t manafest destiny. It’s greed, and a political climate that trusts the fox to guard the hen house.

   So, buy a condo.