The Mortgage Mess: What We Have (and Haven't) Learned

Abstract

Americans who watch the housing market closely (and nearly everyone seems to do so) have observed a bewildering change, occurring seemingly overnight, in price movement and mortgage availability. They are also witnessing a major intervention by Congress and the federal executive branch to avoid a major economic crisis caused by the housing and mortgage markets.

Only a couple of years ago housing prices were inflating at astonishing rates and nearly anyone could obtain a mortgage, often with little or no regard to ability to repay. Today prices have stagnated or declined in many areas of the nation and mortgage financing has become comparatively difficult to obtain. At the same time, defaults and foreclosures on existing mortgage loans have increased to strikingly high levels.

Keywords: housing market, mortgage, housing prices, Hope for Homeowners, homeowners, first-time home buyers