Word: homeownership
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Lowenstein is terrific at walking the reader through complex economic events, and he artfully traces the development of the subprime-mortgage disaster. It sounds like a lofty ideal when Angelo Mozilo, a co-founder of Countrywide, says in a speech in 2003, "Expanding the American dream of homeownership must continue to be our mission, not solely for the purpose of benefiting corporate America, but more importantly, to make our country a better place." Countrywide and others made mortgages available to anyone with a pulse, aided and abetted by Wall Street, which created the market for exotic mortgage derivatives...
...financial crisis hit in 2008, threatened a cherished pillar of urban policy - affordable housing, which has long been regarded as essential for maintaining vibrant diversity in our cities. The victims are among the huge numbers of Americans (estimated at close to 100 million before the latest housing boom promoting homeownership) who rent their primary residences - poor, working-class and even middle-class folks - who have been overshadowed in the deluge of media coverage of the debacle in single-family housing. (Affordable housing refers to that costing no more than a third of a family's income...
...bigger question looming over the FHA, though, is this: At what point does a federal housing agency start to pull back and force private players to resume responsibility for the loans they make? The FHA was founded in 1934 as a way to extend the prospect of homeownership to people who wouldn't otherwise be able to afford it. The agency's low down-payment requirement - itself the subject of some controversy - is designed to help deserving if underqualified people get a foothold in property ownership. The FHA was never meant to be the primary way America finances its home...
...thing, they push us to buy rather than rent. There's a positive side to this, as homeowners tend to take better care of their property and their neighborhood than renters do. But there's a negative one too, particularly in times of economic upheaval like this, as homeownership becomes an economic ball and chain that keeps workers from moving to areas where jobs are more plentiful. Subsidies also tempt us to buy more house than we would otherwise, a wasteful use of capital - not to mention of the energy it takes to heat and cool large houses. Finally, subsidizing...
...action. These groups are powers in Washington. The National Association of Realtors gave more money than any other group to candidates in the last elections ($4 million), according to the Center for Responsive Politics, and its 1.1 million members can do a lot of lobbying. Hence the subsidies for homeownership that never go away. In 1961 departing President Dwight Eisenhower warned of "the acquisition of unwarranted influence" by what he dubbed the military-industrial complex. Maybe it's time to call out the real estate - industrial complex...