Has the belief that we, as American, have a God given right to own a homes caused the mortgage crisis?

Question

I think this whole notion that we "have to own a home to have a worthwhile existence" is both moronic and now it is costing us as a society.

The rich and elite will end up owning all property like in Europe and we will be tenants.

Domestic Manifest Destiny and expansion is over. Let's wake up and smell the coffee

Answer 1

No.

The mortgage crisis is a result of the securities industry looking for new investment opportunities and deciding to make aggregated mortgages a security (securitizing debt). Large numbers of mortgages were aggregated, and were sold as securities, much like corporate bonds.  What went wrong with this scheme was that no one was responsible for vouching for the credit worthiness of the borrower, and no one was regulating the sale of these financial instruments.

Many loans had low introductory rates, and subsequent rate increases in a couple of years that could literally double the mortgage payment.  These loans were granted  to persons with both low income and low credit scores.  When house payments began to increase from 50% to 150%, above the initial payment amount, they became unaffordable to the borrowers.  Defaults followed, which lessened the value of the "securitized" mortgages.  While a lot of the ensuing write-downs were based on herd instinct, the defaults on mortgages that were part of the security instruments did lessen the prospective return for investors.  Panic and chaos ensued.

There will be persons of wealth who benefit from the resulting decrease in real estate values.  I personally know people who are buying up premium properties for resale in a couple of years.  Also, the market dynamic does increase demand for rentals, and many people are investing in value rental property.  But the problem isn't manafest destiny.  It's greed, and a political climate that trusts the fox to guard the hen house.

So, buy a condo.

Answer 2

No.  I think its a combination of consumers overreaching and bankers overextending.

Answer 3

You seem to contradict yourself. If people own homes, how does it then transform into the rich and elite owning all?

But aside from that, are you aware of the Community Reinvestment Act of 1977, which mandated through our good friends in congress that banking institutions reduced the parameters for lending money for the purpose of securing a home? This is the same body that is now rushing to the rescue of the sub-prime market that they created. Sort of reminds me of the Social Security system, which - had the good government overseers left their hands off of, would have endured, even through the 'baby boom' generation if they had left it alone. Maybe their should be a law ... hey, wait a minute ...