U.S. Housing Recovery Stymied by Government
Giving out unsupportable mortgages was a disaster, and now the danger is overreacting and making the standards excessively high.
Palm Coast, FL – July 6, 2011
Sue Stamper, a business owner in Sacramento, California, wants to buy a home. After mortgage- financiers Fannie Mae and Freddie Mac imposed the strictest loan standards in more than a decade, she doesn’t qualify.
Pam Crawford of Lyon Real Estate is trying to sell a three- bedroom bungalow on Sacramento’s east side for $179,000, a third less than what it went for in 2004. She hasn’t found a buyer even after cutting the asking price by $10,000 two weeks ago.
The two women, who haven’t met, illustrate the deadlock crippling the U.S. housing market five years into the crash: While a record share of Americans want to buy homes, U.S. policies, often working at cross-purposes, are making it more difficult. Government-controlled Fannie Mae and Freddie Mac have boosted standards so high that some people previously considered prime borrowers no longer qualify. That’s limiting a real estate rebound that also has been damped by a state attorneys general probe into foreclosure practices and an Obama administration loan-modification program that has fallen short of expectations.
Full Story >>>> Bloomberg
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