Interesting article in the New your Times last Sunday by Amy Schonefeld. 
- 3-5 year mortgages were the norm until the 1920's when they could be financed into 30 years.
- Then came the 1930s and the Great Depression and approx. half of all urban mortgages became delinquent.
- The government then began insuring loans after WWII.
- Within 6 years 53% of all homeowners have no debt.
- Everything great for 20 years until adjustable rate mortgages came on the scent to help homeowners survive record interest rates. These loans were directed at lower income buyers.
- Everything was fine until credit and lending companies focused efforts primarly offering debt to lower income families.
- Yes, homeownership skyrocketed to more than 70%.
- However, the focus of American debt became too highly leveraged against these skyrocketing prices and we had the bubble burst.
The move to insure loans (amongst higher tightening credit standards) by the Housing Stimulus package signed into law just hours ago by the President will hopefully have the same effect as the same move by the government after WWII.
This time lets make sure when we are back to strong economic health, we offer credit to those who truly can afford it.
Love to hear your thoughts
Wexzilla -- Phoenix Scottsdale Real Estate
This gives some great historical perspective. Thanks for pulling this all together. I have very mixed thoughts on this stimulus bill. I am not sure I agree with opening the cash window to private companies (Freddie & Fannie) at the taxpayers expense is the way to go. I am happy the government is showing some type of effort to do something on this. FED adjusting the overnight lending rate is not really a boon for consumers, unless you have a high interest HELOC. I am concerned that the Treasury Dept is moving towards becoming a socialized "National Bank" that will generate huge profits to pay for pet projects rather than returning meaningful savings to the consumers. Just a few thoughts...
If you ever get to see the movie "Maxed" by Morgan Spurlock - the filmmaker who did Super size Me - it is an excellent piece on the credit and lending industry