Consumer Law

A Question About the Mortgage Boom and Bust

By Brian Wolfman

This blog has covered the mortgage meltdown (for instance, among many posts, here, here, and here). We have discussed the regulatory failures of the Clinton and Bush II Administrations, under which agencies permitted (and encouraged) people of relatively little means to purchase homes that they could not afford (or predictably would not be able to afford if the economy slowed down). We noted that, with the burst of the housing bubble, people were sitting on homes worth less, sometimes far less, than their mortgages. And the lenders played a large role by failing to demand credit worthiness from their borrowers and ignoring laws meant to protect borrowers from lender overreaching. This phenomenon arose, it was said, not only from the American dream of home ownership, but, as chronicled by James Scurlock in "Maxed Out," from the idea that the American consumer should strive to acquire the biggest, most elaborate home she can "get into" -- that is, the most she can possibly obtain on move-in day, regardless of her objective, long-term financial ability to stay in the house. We also covered the related financial crisis, the tens of thousands of foreclosures, and the pain and sorrow of individual borrowers. And, we chronicled the reaction: for instance, the tightening of borrowing standards at the FHA and the effort to establish a Consumer Financial Protection Agency.

But what do we know of the people who are still in their homes and are paying their mortgages? How are they doing? Are they content with their homes and their lives? How many people are home owners today only because of the lax lending that took place in the run up to the meltdown? If you have data, pass it on.

Full post as published by CL&P Blog on February 07, 2010 (boomark / email).