Home Ownership: Not The Exclusive Right Of Every American.

In light of our current economic troubles and the still current housing bubble that brought about the lingering recession we are still experiencing today, I believe it is just and proper to bring to light the mistaken belief that owning a home in this country is, "the exclusive right of every American. 

I remember when I bought my first home and to what lengths I had to go to get a $6,000 mortgage. It was to say the least, extremely difficult because as a 21 year old right out of High school, I had no credit and no references to speak about. To close the deal, the seller had to literally forfeit $1000 of the selling price to the bank for a period of one year to insure that I would make my monthly payments of $69.71. They were the hoops that I had to jump through in spite of having a 30% deposit on a house that sold for $8,900.

Those were the days when a prospective home buyer had to be “credit worthy” in order to buy a home. Well, how things have changed and not for the better because in recent years, the lack of credit worthiness for home buyers has given us the worse economic crisis in our nation’s history giving rise to our latest American label, "The Housing Bubble".

America is full of labels because we attach them to everything.   Politicians use them all the time especially when they want to destroy an opponent or when they want to advance their position about an issue. For example, we often hear people speak of the “Bush’s War” referring to the war in Iraq and we blame or credit, depending on what side one is, “Reaganomics” for the economic boom of the ‘90’s or the economic breakdown of 2000 when the stock market and other financial institutions collapsed.   In other words, when something goes wrong in America, we try to explain it with labels. 

We paraphrase the unexplainable. In fact, labels in America have become more real than the reality itself.  But how did we get to our latest label, "The Housing Bubble" to explain our current economic crisis? And when will this bubble finally burst?   Why are homes still down 40% to 50% with businesses failing all over this country?   What caused this drop in prices that has brought our entire economic system to its knees?

I remember clearly. Back in the 1990’s, when everyone was cheering the economic policies of president Bill Clinton, I knew that sooner or later the American people would have to pay a price for the extravagance of the President’s policies especially, when he established the “National Homeownership Strategy Plan” in 1994.”   In a nutshell, president Clinton believed (falsely) that owning a home was the right of every american.

Clinton's plan called for first-time homebuyers to tap in their 401(k), IRA’s and other retirement plans with no penalty so that these people, who did not have a down payment, could use their retirement savings to buy that first house. In other words, potential homebuyers could purchase and own a home with zero dollars for their down payments and closing costs.  

This new initiative that encouraged over-the-board home ownership on the surface seemed a great idea and a great opportunity for first time buyers. But, whoever heard of buying a home with zero dollars? More importantly, who ever said that owning a home was the exclusive right of everyone?  

Today, as we look around this country, we see that the blame for such practices is widespread; there are many in government and in business who the american people can blame for what is now known as, the housing bubble but, president Clinton and later president Bush share some responsibility.  The real culprit in this fiasco is the Washington establishment that created “The Community Reinvestment Act back in 1977.   That legislation paved the way for Clinton and later Bush to force financial institutions in making risky mortgage loans to millions of homeowners, with poor credit ratings.

In fact, I clearly remember the time when then, Attorney General Janet Reno threatened legal action against lenders who refused to make certain kind of loans to homebuyers who were not credit worthy. In general, qualification standards were attacked and as a result were lowered to accommodate those buyers, who otherwise would not and should not have been approved. Credit histories and incomes were also overlooked and in many cases were not even considered for those buyers. Fannie Mae and Freddie Mac, two government sponsored institutions, also lowered their standards allowing them to purchase risky loans from banks and other financial establishments. 

This process was further aggravated by President Bush in 2002 when he urged congress to enact the “American Dream Down Payment Assistance Act”, an action that helped subsidized down payments to homebuyers whose income was below normal. During the next five years, more legislation followed including the requirement of the Federal Housing Administration to eliminate even the down payment for some low income Americans. 

Yes, to be sure, many are to blame for the worst recession this country has ever seen next only to the great depression of the 1930’s but the people responsible for the meltdown of the housing market are those who masterminded the idea that everyone deserved to own a home. 

No, home ownership is not the “exclusive right” of every American. Just like everything in life, buying and owning a home is a gradual process and that process must be earned with savings, a credit history and most importantly, the ability to pay.