30 Issues: Big Housing

Monday, October 08, 2012

30 Issues in 30 Days is our election year series on the important issues facing the country this election year. Today: The state of post-bubble housing policy and federal government's role in the market. Visit the 30 Issue home page for all the conversations.

Open Prep: Questions, Articles, and Links to Get You Started

Key Questions

  • Should Washington get out of the affordable housing business?
  • What do we do now that the "ownership society" failed?
  • Was the federal takeover of Fannie Mae and Freddie Mac a success?

What are your key questions on this topic? Post them below and get the conversation going!


Reading List

Video Archive: Mayor LaGuardia and George Bush on Home Ownership



Got a Follow Up?

Each Friday we'll be following up on one of that week's issues. Got a particular follow-up question from this conversation? Comment below or tweet us. Tweet to @brianlehrer

Comments [12]

The "ownership society" hasn't failed. Most people want to own their own home, but want to be able to afford to do so. The problem with the pre-2008 housing bubble was that government subsidized, cities and states encouraged and Wall St. profited from expensive housing expansion that the majority of Americans just can't afford.

Oct. 08 2012 12:34 PM
fuva from harlemworld

Again, this question about the roles of the govt and the banks in this depression is really critical. We really need yet another fuller, tightly-facilitated discussion on it...

Oct. 08 2012 11:49 AM
The Truth from Becky

What is the name of the loan program that allows for no downpayment, 30 year fixed, credit score under 680? and also the loan program where the mortgage goes down as time goes on? Never heard of them before, maybe I missed what she said...anyone?

Oct. 08 2012 11:46 AM
rp from Manhattan

Huge omission in this discussion. The ONLY Federal financial support for building low-income housing has been the Low Income Housing Tax Credit, since 1989, providing equity to private non-profit and for-profit developers. This is responsible for all the low-income housing built in New York City since the early 90's. There are millions of people and families for whom home ownership is not the housing solution at a specific time. These individuals -- seniors, families -- need decent affordable housing. This program has been used throughout the country for more than 25 years, and is currently providing homes for millions. The credits are allocated automatically to the states, who then allocate it on a competitive basis to their localities. No federal administration. Just a need to comply with the IRS regulations about the tax benefit.

Oct. 08 2012 11:46 AM

Mr. Pinto, as expected, blames CRA for Wall ST profiteering.

The CRA specified that local community organizations would pre-screen prospective loan customers for a special unit of the partner bank.

Both the Angelides report & the TARP IG report absolve the CRA & place the blame squarely on the unregulated Wall ST/mortgage broker market as well as noting the late entry & later defrauding by the same Wall ST entities with their sub-prime/high sales incentive loans.

Also, check the CRA reports mandated by the act itself.

Oct. 08 2012 11:44 AM
BK from Hoboken

Agree with the comment about supporting rent vs own.
As a former mortgage broker, I can attest to the female guests viewpoint. Fannie and Freddie loans were standard conforming loans- full documentation, decent credit. The CRA was simply a bonus paid to the bank/lender for originating a loan in a low income zip code. It did NOT have any effect on or change underwriting standards. However, the low/no doc loans, subprime loans were the really toxic ones. My employer started a sub prime unit and encouraged us to send buyers we couldn't approve tithe sub prime guys. I told the owner that if I couldn't get a buyer approved with the many available options at my disposal, they should not be buying a home. But these subprime loans spread significantly, and was one of the reasons I got out f the business in 2005.

Oct. 08 2012 11:39 AM
joeseph bell from downtown

The Financial industry continues to try to shift blame for their loss of underwriting discipline and greed. As the guest points out, it was the Non-Government backed mortgage loans that led to the problem. No one in the industry actually believes otherwise. Heres a comment found on the American Banker Magazine in response to Wnyc contributor Joe Nocera calling out the banks on this fact:

Marc Hochstein, Executive Editor, American Banker: I respectfully disagree with Jim Wells. The HUD housing goals aside, the GSEs initially resisted the market trends and practices that fueled the subprime bubble of the mid-aughts. Freddie was very wary of stated-income loans when those started to creep up on the market. (See here: When Freddie later embraced adjustable-rate and other riskier loans, Fannie made an effort to stay disciplined for a time (see here: and here: But in the end both GSEs succumbed. Nocera is right; Fannie and Freddie couldn't stand to lose market share to the private-label mortgage securitizations (i.e. Wall Street).

Yes, giving in to this competitive pressure cost the GSEs' preferred and common shareholders, and the U.S. taxpayer, dearly. Should market share and short-term profits and bonuses be the primary consideration for any business, let alone one that has the backing of the U.S Treasury? Probably not. But the fact remains: Fan and Fred were late to the subprime party, which was already getting rowdy when they finally showed up, against their own better judgment, with a fresh case of Four Loko.
Posted by Marc Hochstein, Executive Editor, American Banker | Tuesday, December 20 2011 at 4:33PM ET

Oct. 08 2012 11:35 AM
jgarbuz from Queens

I agree that rental assistance rather than promoting home "ownership" is where the bulk of the governmental role in the housing market should be rolled back to. This "American Dream" nonsense is what got us into this mess in the first place.

Oct. 08 2012 11:31 AM

The Bush Corp. Presidency did so much damage. We will be dealing with it for years and years to come. Now that he's out of office, no one seems to want or have the guts to really detail all the damage he has done to the American people, at home and abroad.

Oct. 08 2012 11:29 AM
Tom from Manhattan

You skipped very adroitly over the Reagan era. There were not just "cuts made to HUD." It was turned into a money machine by Republican politicians in one of the worst of the many scandals of that outrageous crime wave that swept Washington, DC.

The Wikipedia article on the matter begins with this summary:

The HUD rigging scandal consisted of Department of Housing and Urban Development Secretary Samuel Pierce and his associates rigging low income housing bids to favor Republican contributors to Reagan's campaign as well as rewarding Republican lobbyists such as James G. Watt a former Secretary of the Interior.[16] Sixteen convictions were eventually handed down . . .

The article goes on to enumerate the convicted culprits, including Senator Al Damato's brother, who used Senate letterhead to run his end of the scam. Damato, implausibly but legally, claimed innocence.

Funds were not "cut," they were redirected into the pockets of thieves.

Oct. 08 2012 11:23 AM
sandra mann

i am stunned that the supreme court is not part of the 30 issues, 30 days.
3 justices will probably retire in the next 4 years. The Presidency and the House turnover. the impact of the supreme court decisions determine the course of our history more than any of the branches, in my estimation.
i have heard NO discussion anywhere from any commentator about this.
can you try to address it before the election?

brian is the most intelligent, informed, balanced moderator on radio and t.v.
a star extraodinaire.
dr. sandra mann

Oct. 08 2012 11:20 AM
fuva from harlemworld

Possible to deal with the effect of housing policy on the Great Recession?
Yes, you've gone down this road before. But I think it bears repeating. Because many continue to absolve an under-regulated Wall Street of any responsibility, placing it all on CRA/Fannie/Freddie. Clarification here is critical.

Oct. 08 2012 11:09 AM

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