The housing bubble burst because there was too much buying and too much building. People buying new homes they couldn’t afford. People buying new homes to sell at a quick profit. People buying second homes. As prices rose demand dwindled. Developers did great for a while but they overextended themselves. A downturn was a few years overdue. The party was over. What was left was the cleanup. People talk about giving money to people who lost their homes. Now banks really don’t want to go into foreclosure and certainly not with a glut of foreclosed homes already on the market, so it puzzles why we need to give people money when they should be renegotiating with the banks themselves? Let them restructure their mortgage. As long as they have a steady income and were able to pay their mortgage before why shouldn’t they be able to pay them now? Mortgage rates are low. The prime is an amazing 1%. If people can’t afford the same home now then a bailout won’t help much, or is the government going to give them a free home? If the government is giving away homes then give me one too preferrably in La Jolla. It must be that people couldn’t afford it in the first place and/or speculators were buying numerous properties with little or no money down. That scenario makes more sense because a crash would be more likely than simple restructuring. This is criminal because as anyone who applied for a mortgage knows that one must prove they can afford the payments. But most of us know that mortgage brokers will manipulate numbers in order to close the deal and sell a house. It was up to mortgage companies to do due diligence and they probably didn’t. Everyone caught up in this is to blame. The buyer, the mortgage broker, and the mortgage company. Fannie Mae and Freddy Mac had to be big players here knowing full well they were giving loans to people with not enough money down and too big a mortgage to eat. No one gave a damn it was full speed ahead. I can’t see how any of this has to do with the price of oil.
