Home ownership, leaving the banks alone to regulate themselves, has always had home ownership at 60% of the population.

Clinton wanted to get it to 66%, so the government games the system. They realized this meant giving loans to those higher risk. The reason Clinton wanted to stop at 66%, is he knew any number above that, meant giving loans to people who were a ridicules risk.

By the time the bubble broke, home ownership was at 75%. Washington had to know the people getting the loans were wildly unqualified to own them. 

They just knew as soon as the number stopped going up, everything was going to collapse, so they took the short sided route, and kept trying to give loans.

There is no way you can wash the governments hands on this. They caused this problem, and they know it was a problem years before it fell.

A bubble will eventually cause targets to be overshot a lot, before the correction begins.  I would say fallout of the dotcom bubble also lent to the madness.  Investors were seeking the next big thing and cause things to spiral out of control.

I don't think I am saying we should wash the Governments hands on this.  But I think they aren't as much to blame for the problem as the banks and the individuals who took out the bad loans.  Its not the governments fault for all of our problems.  

I do believe that all of those people who are losing their homes deserve a home.  I just think most of them should have went with a cheaper model.  If they had they would probably still be living in their homes instead of them being homeless and the house empty.  If your making $50k a year and you own a $250- $350k home mortgage there is simply no way you can afford it.   The banks knew it and so did the guy making $50k.  

First off, no one deserves anything and certainly not a home. It is one thing to argue that everyone (even those of modest means) should be able to achieve home ownership through hard work and financial discipline, and it is quite another thing to argue that everyone deserves a home of their own. The belief that everyone should own their own home is the reason why Fannie Mae and Freddie Mac were willing to back mortgages of individuals on welfare and/or individuals who had no income.

The worse of the worst loans were issued only because they were easy to sell to pseudo-governmental bodies; and these pseudo-governmental bodies were willing to accept these loans because the good intentions to encourage everyone to own a home ignored the common sense that some people simply couldn’t afford a home.

Only if the higher ups want to keep him in, if they dont they will replace him.

Simple as that...

I didn't mean we should just be giving away homes to everyone.  Obviously you need to be able to pay for it, and I don't understand how anyone can take that as what I meant.

These people that were buying homes obviously thought they could afford something.  So yes they do deserve something, if they are hard working people (which most of these folks were).   They just should be able to afford it, which is why I said a cheaper model.  Real Estate agents push you toward the more expensive house so they can make a bigger % of the cut.  Then the banks let them buy it cause they make a bigger cut.  Then in 3 years later they lose it and someone else does the same thing.  Probably with the same group of people involved, except for the original homeowner of course.

The size of the home (really) isn’t the issue ...

For the most part, throughout the housing bubble people were buying homes that were in communities and of a size that were in line with what people with similar (relative) earning potential were buying before the housing bubble. The problem was that the near record low interest rates and the government mandated loose lending standards pushed the purchase price of homes to ridiculous highs; and the home that someone would have bought for 3 times their yearly income with 10% down on a 15 year mortgage 20 years ago they were buying for 6 times their yearly income with 0% down on a 40 year adjustable rate mortgage.

Overall, the government's efforts to make housing more affordable made housing less affordable and created a timebomb that would eventually explode.