Today’s Wall Street Journal has an article titled “How Many Borrowers Qualify for New ‘Safe’ Mortgage Rules?

    The article said “About one in five mortgages purchased by Fannie Mae or Freddie Mac over the 1997-2009 period would meet the proposed standard of “safe” mortgages that would be exempted from costly new lending rules, according to a federal report published last week.”

     My opinion is that the great real estate, mortgage, and stock bubble occurred during 1997-2007, so if 80% of the lending done then was not safe then that explains why the bubble got so big and why it is so hard for the government to re-inflate the housing market. Since the government is not going to allow the banks to return to the reckless lending standards of that era then the only way the housing depression can be resolved is by prices of homes coming down until they are low enough for new investors (landlords) to buy them and rent them out at a profit. Further, since there is a lot of speculative talk that Congress will take away the mortgage interest deduction, then, if that happens, home prices would have another reason to continue declining.

    I have written about “housing not comparable to the past” and “bearish housing market”.

    This is an example of independent financial advice.