Recently I have been noticing the GOP trying to cast blame at the democratic party for the housing meltdown reaching back to the Clinton years, saying it was pressure to lower standards by Fannie and Freddie which lead to the crisis.
I havent heard anyone talk about the Zero Down Payment introduced in 2004 by the administration, and the American Dream Down Payment Act of 2003.
Ronald D. Utt, Ph.D., "American Dream Downpayment Act: Fiscally Irresponsible and Redundant to Existing Homeownership Programs," Heritage Foundation Webmemo No. 378, December 5, 2003.
Risky Incentives
The Zero Down Payment Act (H.R. 3755) would require the FHA to allow eligible first-time homebuyers and "displaced homemakers" to buy a house without having to provide a down payment. Under this plan, buyers would be able to borrow more than 100 percent of the purchase price of the house, and the FHA would insure the lender up to the full amount of the loan in the event of borrower default and foreclosure.
These mortgages are risky because of the absence of an owner-provided down payment requiring some personal sacrifice to accumulate. Without a financial stake in the house, subsidized buyers have less incentive to be responsible owners. Such owners see themselves as little different from renters and often act accordingly. Indeed, one financial analyst contends, "A home without equity is just a rental with debt."
http://www.heritage.org/...
Its clear that the Bush Administration supported and encouraged the horrible lending practices that lead to this economic meltdown.
Economic experts like Dr Utt warned against it.
In June of 2004 a group called Citizens Against Govt Waste wrote:
http://www.cagw.org/...
H.R. 3755 allows borrowers to purchase up to three-family housing units with no down payment. In essence, taxpayers will be providing financial backing to people who are purchasing housing for what is most likely a business or investment purpose.
As recently as April of 2008 the FHA was criticizing itself for zero downpayment mortgages.
http://www.pbs.org/...
"Ameridream and a non-profit called the Nehemiah Corporation are the largest providers of seller-funded down payment assistance for FHA Insured loans. It works like this. A seller makes a charitable donation to a non-profit and in turn that non-profit gives a down payment gift to the buyer. That donation generally comes from the proceeds of the sale of the house. But an increasing number of people who get seller-funded down payment assistance are defaulting on those loans. Mortgage consultant and former HUD official Howard Glaser says the program is being abused."
I think that the Administration and the GOP need to be held accountable for why we are in this financial meltdown. These programs are a huge part of the problem.