Who is able to own their own home in America?

The American Dream- Home Ownership

Capital is a wonderful thing; you get money for doing nothing but owning it. I would say that nothing is more important, (not even education) to living the American dream, middleclass life style then owning the land under which your home stands. It takes you from paying an ever increasing rent, to investing in yourself as you payback the mortgage and then living rent free and enjoying (hopefully) value increases won by the economy around you. The only problem is that the more you and I own the less there is for big investors. As quickly as I can, I will show that in the long run, Republican policies have destroyed or removed programs that have encouraged and allowed average citizens to be homeowners; and with it, at least minimized, if not destroyed the middle class.

The Savings and Loan Crisis

In response to the great depression, Franklin Roosevelt’s “New Deal” (1930s) created the Home Saving and Loan industry. The Federal S&L Insurance Corp., the Home Owners loan Corp, FHA and Fannie May together originated the 30 Year Fixed Mortgage. Home ownership went from an old traditional approximately 45% up to 65% in the following 30 years. But then, who can forget Ronald Reagans refrain, “get government off our backs”. The results as cited in Encyclopeda.com “FEDERAL SAVING AND LOAN INSURANCE CORP.”

. . .most savings and loans were mutuals or community-based institutions owned by the depositors themselves. But in the 1980s the federal government initiated deregulatory measures, which transformed the savings and loan industry. Speculators were allowed to convert savings and loans into stock corporations. This freedom enabled savings and loans to raise more capital but the new owners were less concerned with the local community and more interested in quick profit.. . . The 1984 Depository Institutions Act permitted developers to own savings and loans and allowed owners of these institutions to lend to themselves. Savings and loans quickly took advantage of the new rules to engage in high-risk speculation, particularly in commercial real estate. When these deals failed so did many savings and loans. Over five hundred savings and loans collapsed during the 1980s and created a crisis that forced the FSLIC into insolvency in 1989. Responsibility for FSLIC's insurance obligations fell to the FDIC. The U.S. government expects taxpayers will have to pay more than $500 billion over thirty years to bail out the failed savings and loan associations.

Wikipedia.com “savings and loan crisis”, said:

By 1995, the RTC had closed 747 failed institutions nationwide, worth a total possible book value of between $402 and $407 billion. In 1996, the General Accounting Office estimated the total cost to be $160 billion, including $132.1 billion taken from taxpayers.

Increasing Home Ownership

So we made a mistake; that is not so bad, let’s all learn from it, that not all regulations are bad and why not re-establish the savings and loan as it was before! Instead, in 1989, Congress and the President George H.W. Bush agreed on a taxpayer-financed bailout measure known as the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA). It provided $50 billion to close failed banks and stop further losses. It set up a new government agency called the Resolution Trust Corporation (RTC) to resell Savings and Loan assets, and use the proceeds to pay back depositors. FIRREA also changed Savings and Loan regulations to help prevent further poor investments and fraud. Not bad and a plus for the Republican Party, leading to a slight rebound in home ownership all through the first part of the Clinton years. Clinton, noting the success of the VA Home Loan Guarantee Program, wanted to expand that to a broader segment of working families. Through HUD he set up programs with the goal of increasing the rate of homeownership from a persistent 64% to 67.5% by the year 2000. In fact he made the goal and no banks suffered for it.

Creating a Home Owner's Nightmare

Then we had President Bush, which to his credit, shared Clinton’s belief that Americans can do best when they own their own homes. Unfortunately he also believed that markets do best when they are unregulated. Somewhere along the road the industry, went from finding ways to honestly qualify middle and low income families for fixed 30 year mortgages, to insidious mortgage deals designed to fail. Consumers were told to lie about their income on the mortgage application – no worry, we are not regulated. Buy your dream home and take money out to boot, we have this amazing variable rate loan and you just refinance before the rate goes up. Homeownership was no longer the goal, the new goal was getting rich in what would prove to be traditional bubble financing. Right wing talk show broadcasting stations (Fox in particular) started hawking how-to books sold through advertisements featuring fake brain surgeons who bragged about how they quit the low paying job to make the real money in real estate. And this was no mistake by the finance industry; they made big profits turning the loans over in secondary markets as Triple “A” securities because the private mortgage rating industry that did the grading for the secondary market (like your pension funds) was itself unregulated. When they did kept these securities themselves they sold paper to your retirement funds to guarantee their full payment. That would be the like a builder, who owned the inspectors, paying your retirement fund to guarantee that the house he built doesn’t fall down!

Bank are Bailed Out; Homeowners Lose

Around 2006 banks stopped refinancing and soon after started foreclosing with lawyer factories doing the filings. Everyone in the finance industry knew the market was going to fall, and fall because of their actions; they just didn’t care. We know they didn’t care because, even after they failed, and needed government bailouts, they kept giving themselves in high salaries and bonus as if saying to the stockholders, we robed for you and we did it in a way that required the government to put the money back. This is the same corporate morality as displayed by President Trump when he admits he paid little or no taxes, “because I am smart”. As a consequence of this smartness; first off, the US home ownership rate dropped about one half a percent per year and did not flatten out until half way through the Obama expansion and secondly, the Bush Depression soon followed and was then passed on to President Obama. Obama, who was preoccupied with saving capitalism, had no time to deal with the foreclosures. Indeed he and had an unbelievably hard time, with the new found “fiscally Conservative” Republican Congress, just getting funds to handle the crises, not to mention passing simple consumer bank regulations, and working on the much need health care legislation. Finding a way to stop the hundreds of thousands of foreclosures would have been hard enough if the democratic President could have hoped for some Republican help but as you must remember the stated goal of the republican party as quantified by senator Mitch McConnell of Kentucky, the then minority leader, it was that his “first goal was to see Obama defeated”. In an almost petty fashion Congressional Republicans turned down requests for White House meetings, refused to return the president’s call and walked out of budget talks. Furthermore, ask any Republican Party cadre today why we had the Bush Housing Crises and instead of admitting any complicity in making rich people richer through nonexistent oversite, he will reply, “That’s what we get for trying to let the poor people own homes.” Really, that’s what they say – ask them!

The Middle Class is Weakened

Now, as the home ownership rates are statistically flat, back to rates just prior to the destruction of community based saving and Loans, there is no government program for first time home buyers. Additionally the Trump/Republican Party has very publicly signed one of his grandstanding resolutions that would repeal whatever regulation, in Dodd-Frank, the international banks wish not to be hindered with. The Republican motive now, with a complete disregard to the distribution of capital to bolster a needed middle class, is to passively allow the transfer of residential home as well as small business properties, especially in growing markets along both the east and west coast, from middle and working strata families to large national and international finance powers. These are the same powers which control the Republican Party so as to own you and our country.

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