Former Treasury Secretary John Snow told Congress the U.S. went “too far”‘ encouraging American home-ownership, saying that: “In retrospect, the bipartisan consensus to promote housing went too far.” As Bloomberg reports, Snow oversaw the “ownership society” where home-ownership rates hit an all-time high of 69.2 percent. He, like former Fed chief Alan Greenspan, now says they are “shocked” by the rapid meltdown of the financial sector.
One piece of the problem was granting mortgages to gullible or desperate people who truly wanted to buy a better home for themselves and their family. But a huge piece that continues to go under-recognized was the the incredible amount of real estate speculation undertaken by small scale investors, real estate agents and developers, and “regular Joes” trying to make a quick buck by flipping real estate.
October 24th, 2008 at 12:37 pm
The “shady” real estate agents out there also added to the trouble. With our recent house purchase, we had to deal with a seller’s agent who encouraged her clients to take on a mortgage that they would never be able to manage – e.g. 100% financing and a two-year arm. Result: a short sale. Many of her clients are not English speaking and much of what they learned about their real estate investment was filtered through her… in whatever manner she wanted them to hear it, as long as it benefited her and her commission.
Agents like this who were just trying to make a quick buck and cash in on the real estate boom of a few years ago are now scrambling because business isn’t as easy as it once was. And, unfortunately, a lot of their ill-advised clients are the ones who are suffering most. Perhaps I’m naive and much of the real estate biz is like this and we were just incredibly lucky to have an agent who was on the up and up.
October 24th, 2008 at 5:24 pm
That’s partially because getting a real estate license is almost easier than getting a driver’s license. Same thing with the mortgage brokers; and contractors; and speculators. All of these amateurs and crooks out there unchecked with a feeding frenzy cooked-up with Fannie and Freddie accepting anything and Wall Street more than happy to package it up pretty and sell it off…. are we surprised by the outcome??? THINK OF A WILD TORNADO with Fannie and Freddie sucking-up every junk loan and get-rich-quick scheme like an old school Hoover vacuum…
The UNWINDING of this mess will not be pretty but there are lots of silver linings too….[i'll save those for a later day]