Jane

Don’t Blame Free Markets for the Crisis: They Never Existed

I also agree w/the author that this hasn't been a free market, and deregulation has turned into decriminalization. Big business, which normally cries, "Get big government out of our lives!" has turned 180 degrees to, "The government must bail out our big crooked companies!" People who are here reading articles such as this have a clue about what's going on. Sadly, many Americans never see articles like this. They are getting all their information from the big TV networks, which still hasn't truthfully addressed the housing bubble, the fraud, etc. Most Americans are still living in ignorance about what happened, and therefore most of them are apathetic about demanding REAL change.

The Simplicity of Supportable Demand for Housing

Many good points in this article and I'm glad to see you name the builders and real estate industry as a major pusher of this bubble. But bailing out home buyers is really bailing out the industry. Directly or indirectly all bailout money is going into the pockets of the industry that caused the housing bubble and bust, and the economic mess we are in now. I'm against all forms of bailouts and tax incentives for home buying because they help keep prices artificially inflated and delay real recovery and a real economy based on sound principles instead of bubbles and govt blessings of these bubbles. It's disgusting that these industries that caused this are still getting their way in Washington DC through lobbying and campaign contributions. Many of these people committed mortgage fraud and should be going to jail, for example just one of many cases, Beazer Homes criminal mortgage fraud case settled with a promise to pay the govt money. I won't hold my breath waiting to see that promise fullfilled, and it creates little deterrence to others to do the same thing. We won't see real recovery with bailouts, we'll just see more of the same. But that is what these industry people want, isn't it?

10 Subprime Myths?

Agree w/Leftfield that builders were part of the problem, (his comment re: myth 7). They opened up their own mortgage co's or set up affiliated arrangements with other lenders like Countrywide. Beazer Homes was investigated for criminal mortgage fraud and settled w/the govt in exchange for not being prosecuted this year. This is going on all over and it's disgusting that when you here "experts" talk about homebuilders it's rarely mentioned that they were a large part of what was wrong w/the economy and this industry. Still are.

The Distressing news about “Distressed” U.S. properties

I love to see it pointed out that mainstream media is brainwashing the public, because that IS what's happening. We've been dumbed down by inaccurate "news," and TV shows that seem written by someone w/the brains of a gnat. The real news is online, in alternative sites and blogs, and for those who have the time and ability to digest the numerous bits of info, statistics, etc. In other words, almost no one. The majority of the population uses the internet--if they have it--for entertainment. There are real estate shills on TV news all the time advising people to buy as prices continue to fall. They should be arrested for some kind of fraud, for telling the public the same lie that helped tank the economy. The entire real estate and mortgage industry helped destroy the economy and they are getting the bulk of the bailout money, which is being packaged as "helping homeowners." This country is a mess, and I see us sliding into third world status within a generation or two. The crooks who will make off w/billions are the perpetrators.

New Reforms Address What Is Popular, Not Important

All of these programs to get people into houses they can't afford, down payments "gifts" that are really money laundering for sellers and builders, etc, point to the obvious: Housing is overpriced. When prices come back to earth, where people making average incomes can afford average houses, without predatory loans or appraisal fraud, then things may recover. But I think the industry got too addicted to escalating profits in the last boom, and many of those profits came from turning over loan after loan that was doomed to default. Hence, we now have an economy that's in terrible shape, many people laid off or soon will be, and people cannot afford to spend to "save the economy" anymore. Now, they have to save, to save themselves.

Housing: Playing Games with Appraisals and Value

Thanks for mentioning the builder who's being sued for appraisal fraud. It's not just one builder doing it though. I would not pretend all builders got in on this but many did, including big so-called well trusted co's. I hope to see more investigations and if necessary lawsuits to put a stop to this. I don't think many realize, or admit, the role builders played in the housing bubble and bust, and that it was based on fraud or something darn close to it. To add insult to injury many builders are still advertising they do loans that are risky. And they are lobbying to bring back or create more toxic programs and/or get tax payers to foot the bill for the still overpriced houses. Regardless of what the builders say it costs to build, etc, the fact remains, much of housing is still not in line with incomes. With so many people losing their jobs, having to take pay cuts just to keep a job, etc, it's unrealistic and bordering on a fraud on the whole country, for this industry to keep pushing toxic loans, inflated appraisals, and more junk we tax payers have to pay for, so THEY can profit. It was a mistake to let so much of the economy rest on housing. If you're going to put all your eggs in one basket at least make sure the basket is not built of mud.

As Housing Market Struggles, Homebuilders Focus on Survival

It is amazing how many experts write articles on homebuilder stock, the new home market, etc, without ever mentioning that factors that just MIGHT matter include: rampant shoddy construction and code violations; worthless warranties; abusive arbitration clauses; hidden complaints due in large part to arbitration clauses; builders having a big part in creating a housing bubble with artificially inflated prices and mortgage fraud, and so on. These problems, despite being ignored by mainstream media and many "experts," exist and have had a hand in the current economic problems...more than most casual readers know. I doubt the casual reader of economic information realizes that six of the big builders were fined last year alone, (plus I don't know how many smaller builders), for lending law violations. Despicable that they just pay a fine instead of being really held accountable for their hand in this mess. That's just one example. Investors who are really doing their homework would do well to research and consider these things. If they had, perhaps many Americans would not have seen their investments go up in smoke by leaving their retirement funds in the hands of "experts" who failed to "see the housing crash coming." Many saw it coming,and warned. Far too few experts paid attention.

Treat the Market Illness, Not the Symptoms

You're right that rewarding builders for bad business decisions is the wrong thing to do. But it goes further than builders just building too many houses. I believe if these houses were built well and priced right, and if the industry hadn't gotten the earned bad reputation for not honoring warranties, the houses would sell. Americans have been ripped off by bad builders and their affiliated lenders, (as well as some other lenders), enough to be gun shy now. They know the houses are not well built, and are overpriced. They see billionaire building company CEOs crying for a bailout as if they are the victims. I believe the people in the Charlotte Observer's series "Sold a Nightmare," which led to a federal investigation of Beazer Homes for mortgage fraud, do not see their builder or builder's affiliated lender as victims. Homebuilding got in on predatory and fraudulent lending, artificial inflation of property values, and has been doing shoddy work increasinly for decades. No it's not just that they overbuilt.

Tim Geithner vs. The American Banking Elite

Every day I see another ad, or a "news" article that's really an ad packaged as news, that says the housing bubble didn't touch THIS area, and "It's a Great Time to Buy a Home!" Nevermind that foreclosures are way up, people are being laid off, and houses are still overpriced compared to what people can really afford! And nevermind that a national problem affects all areas!

Of course, such ads/"articles" are from the housing industry. They pay a lot of money to the media to run this tripe, and therefore the media glosses over the problem. For years there were warnings that the housing market was turning into a kind of Ponzi Scheme that could cause severe damage when it collapsed. And yet for those years the media ran the industry hype and ignored consumers who begged them to cover mortgage fraud, etc. Why did they go to the media? Because law enforcement told them it was "civil." And they could not pursue the cases in civil court most of the time because suing is impractical and unaffordable, and/or they were prohibited from suing by an arbitration clause.

While I can't excuse the media for ignoring it, I REALLY can't excuse the govt from continuing to look the other way when the FBI told them the same thing--this will take out the economy and it's the industry that's doing it. And I can't excuse govt agencies that let big companies off the hook for lending law violations by paying fines.

The home buyers were in some cases wannabe investors, not really people caught up in sometimes unrealistic dreams. Of those buyers not in that category you basically have two types; those who were complicit in loan fraud, and those who were victims of loan fraud. I could get behind a bailout for victims of fraud. That amount of money would barely be felt by taxpayers and would actualy do some good, but the govt needs to go after the crooks, not just pay for their damage. I can't get behind a rescue plan for anyone else, especially the industry. The industry created this problem, and the amount of money the industry's demanding is obscene, and will probably bankrupt the country. A heck of a legacy to leave to the next generation.

DAP: The Bad Idea That Won't Die

Thank you so much for this article! I have grown so tired of, and disgusted by, the housing industry's incessent lobbying for things that are very bad for the economy, very deceptive to home buyers, and a total sham. This whole bailout and all the ridiculous toxic lending practices make me want to hurl. This industry got us into this mess and it's appalling that Congress is so in bed with them that they risk bankrupting the country and destroying millions of families to support wealthy crooks at the heads of homebuilding and lending firms. Our govt is headed toward third world style corruption.

Cramdowns and Refinancings Won't Need Appraisals

By around 2003 I was reading news articles in which appraisers were quoted saying they were pressured by lenders and homebuilders to artificially inflate the value. I've seen an appraiser's petition online to stop the practice. I believe there are appraisers in the business who are honest and ethical, however one's ethics tend to become a lower priority when an entire country is swept up in housing mania, and industry professionals are part of the problem. They chose between having work or not, and many sold out. Hats off to those who retained their ethics and refused to play the game, especially to those who spoke up in the media and said this was going on. No one in the industry or govt can claim they were not warned.

Stimulus Plan Includes Tax Breaks: Stocks That Will Benefit

D McHattie, I couldn't have said it better! And I'd have loved to vote for someone other than the usual republican-democrat but on our state's presidential election ballot, there WAS no other choice and no write in option. It was the usual 'choose the least offensive candidate' election. I am disappointed in Obama's switch to support corporate welfare for the very people who caused these problems. Not sure McCain woudl've been any different, in fact I'm pretty sure he would've also been more of the same. This is not about party it's about pretty much ALL our elected officials being corrupt and incompetent. They all take industry lobbying and campaign money don't they? Therefore they are all looking out for corporate pals, not for their constituents.

Are Home Prices Still Too High?

The only way housing prices are going to be kept up is artificially, and even that can't last. None of this artificial bubble was going to last, and predictions were early and many, they were just not listened to by anyone in power to change the course of things: (IF ONLY we had seen...govt cracking down on fraud, the industry voluntarily choosing to act more responsibly, mainstream media choosing to educate buyers on the truth instead of regurgitating industry spin, and if buyers who had the opportunity to see what was going had not chosen to put on blinders).

Prices have to come down to what people can afford, and that means housing has a long way to fall unless govt wants to artificially inflate INCOMES to match the too-high housing prices. People have become too jaded to high prices. They think $250K for a modest ranch house is cheap. It's not. We need to forget California's whacky prices and look at what a house is really worth, and what people can really afford. A middle class family, which is what most Americans are, should not be buying a house that cost more than about $150K, and they should have 20% down, and their total mtg pmt should not be more than a quarter to a third of their income. When those figures are in line again we can call bottom. Until then, the industry can spin all it likes, but people are tapped out and some are out of work. They're not going to buy half million dollar McMansions now. The industry needs to get over it and either change the way they do things or find another line of work.

Personal Responsibility and the Housing Bubble

As for the title which includes the term Personal Responsibility, I'd like to see the housing and mortgage industries' leaders take personal responsibility. And, the govt officials who took their lobbying money and campaign contributions, too. The govt was warned years ago that mortgage fraud and lax lending would lead to a meltdown, and it did nothing.

As I said above, these industries sponsor networks and shows like HGTV's. They hammered the message into people's heads for years that they ought to own a home even if it mean using toxic financing. Of course they didn't call it toxic, they called it The American Dream of Home Ownership. The CEO's calling the shots at these companies were in some cases committing fraud, and they were certainly being unethical and destructive. Their pals in govt also knew. These people were in it for short term huge profits for themselves, it was never about homeowenrship. They of all people should've known it was wrong and dangerous. So let them take some personal responsibility, too, maybe by first being stopped from their incessant whine for a multi-billion dollar bailout for their industry. They should be investigated for fraud instead.

Those borrowers who lied or were complicit in fraud should also face charges. But many were not lying, they were duped, fooled, suckered...and in some cases outright defrauded by lenders forging documents.

Personal Responsibility and the Housing Bubble

Someone else in these many comments may have already noted it, but HGTV shows aren't there just because that network thought them up...they are there because the housing industry wanted them there. Look at the credits and sponsors of these shows. I see the National Association of Home Builders on some, for example. The mainstream media is controlled by corporate interests, and in some cases outright owned by corporate interests. These industries are pushing their agenda by way of "entertainment," and even "documentaries." It's nothing new.