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Who Caused the Housing Bubble and Subsequent Financial Meltdown?

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October 07, 2008 – Comments (9) | RELATED TICKERS: FNMA , FMCC

I found this while looking for an SNL skit that apparently NBC had pulled:

I resolved not to make political blogs as this really isn't the proper forum for them, but I made an exception for this one simply because it is so tied to what's affecting the markets right now.

9 Comments – Post Your Own

#1) On October 07, 2008 at 5:59 PM, DemonDoug (78.88) wrote:

that is laughable the mccain can be an agent of change.  they both were for the bailout bill and helped push it through the senate and house, and on housing they are equal.  mccain also has a long history of bad governance when it comes to financial matters, and his secretary would be phil gramm who is even worse than obama when it comes to payola from banks.  only someone who is a real courageous politician like ron paul or even jesse ventura would bring real change.

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#2) On October 07, 2008 at 6:19 PM, blake303 (29.21) wrote:

You are not the first to post this video, but I would suggest doing your own research rather than relying on YouTube smear campaigns to formulate opinions. I think you will find that Republicans were just as responsible for enabling the current economic disaster.

Take a look at the American Dream Downpayment Act - Devoish has blogged about it. I would also look into Phill Grahm (McCain's Economic Advisor) and the repeal of Glass-Steagall, which allowed investment banks to underwrite and trade MBS and CDOs.

There is plenty of blame to go around, but spreading misinformation like this is not going to get us out of the mess we are in.

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#3) On October 07, 2008 at 6:25 PM, MarketBottom (29.18) wrote:

The American Dream Downpayment Initiative (ADDI) was signed into law on December 16, 2003. The American Dream Downpayment Assistance Act authorizes up to $200 million annually for fiscal years 2004 - 2007. ADDI will provide funds to all fifty states and to local participating jurisdictions that have a population of at least 150,000 or will receive an allocation of at least $50,000 under the ADDI formula. ADDI will be administered as a part of the HOME Investment Partnerships Program, a formula grant program.

Purpose

ADDI aims to increase the homeownership rate, especially among lower income and minority households, and to revitalize and stabilize communities. ADDI will help first-time homebuyers with the biggest hurdle to homeownership: downpayment and closing costs. The program was created to assist low-income first-time homebuyers in purchasing single-family homes by providing funds for downpayment, closing costs, and rehabilitation carried out in conjunction with the assisted home purchase.

Type of Assistance

ADDI will provide downpayment, closing costs, and rehabilitation assistance to eligible individuals. The amount of ADDI assistance provided may not exceed $10,000 or six percent of the purchase price of the home, whichever is greater. The rehabilitation must be completed within one year of the home purchase. Rehabilitation may include, but is not limited to, the reduction of lead paint hazards and the remediation of other home health hazards.

Eligible Customers

To be eligible for ADDI assistance, individuals must be first-time homebuyers interested in purchasing single family housing. A first-time homebuyer is defined as an individual and his or her spouse who have not owned a home during the three-year period prior to the purchase of a home with ADDI assistance. ADDI funds may be used to purchase one- to four- family housing, condominium unit, cooperative unit, or manufactured housing. Additionally, individuals who qualify for ADDI assistance must have incomes not exceeding 80% of area median income.

Eligible Activities

ADDI funds may be used for downpayment, closing costs and, if necessary, rehabilitation in conjunction with home purchase. ADDI funds used for rehabilitation may not exceed twenty percent of the participating jurisdiction's total ADDI allocation. The rehabilitation assisted with ADDI funds must be completed within one year of the home purchase.

Funding Status

In FY 2007, Congress appropriated $24,750,000 for ADDI. Previously, Congress appropriated $74,513,000 in FY2003 and $86,984 in FY2004, $49,600,000 in FY2005 and $24,750,000 in FY2006. HUD has issued formula allocations for FY 2007 to assist participating jurisdictions in preparing their consolidated plans.

Obtaining Assistance

First, check the formula allocation page to determine whether your local HOME administering agency received ADDI funding. If they did not receive ADDI funding, ADDI funds may be available through your state. Every state received ADDI funds. The contacts for state are available in the HOME administering agency list.

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#4) On October 07, 2008 at 6:26 PM, kdakota630 (29.50) wrote:

Blake303, admittedly I didn't know anyone else had posted it, otherwise I wouldn't have bothered.

I also agree with you that there is plenty of blame to go around.  My main reason for posting it was to show that despite Obama's ads suggesting that Republicans are the main cause of the problem, his hands are among the dirty ones.

DemonDoug, I TOTALLY agree with you about the Ron Paul part, not as sure about Jesse Ventura though.

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#5) On October 07, 2008 at 6:27 PM, MarketBottom (29.18) wrote:

The American Dream Downpayment Initiative (ADDI) was signed into law on December 16, 2003. The American Dream Downpayment Assistance Act authorizes up to $200 million annually for fiscal years 2004 - 2007. ADDI will provide funds to all fifty states and to local participating jurisdictions that have a population of at least 150,000 or will receive an allocation of at least $50,000 under the ADDI formula. ADDI will be administered as a part of the HOME Investment Partnerships Program, a formula grant program.

Purpose

ADDI aims to increase the homeownership rate, especially among lower income and minority households, and to revitalize and stabilize communities. ADDI will help first-time homebuyers with the biggest hurdle to homeownership: downpayment and closing costs. The program was created to assist low-income first-time homebuyers in purchasing single-family homes by providing funds for downpayment, closing costs, and rehabilitation carried out in conjunction with the assisted home purchase.

Type of Assistance

ADDI will provide downpayment, closing costs, and rehabilitation assistance to eligible individuals. The amount of ADDI assistance provided may not exceed $10,000 or six percent of the purchase price of the home, whichever is greater. The rehabilitation must be completed within one year of the home purchase. Rehabilitation may include, but is not limited to, the reduction of lead paint hazards and the remediation of other home health hazards.

Eligible Customers

To be eligible for ADDI assistance, individuals must be first-time homebuyers interested in purchasing single family housing. A first-time homebuyer is defined as an individual and his or her spouse who have not owned a home during the three-year period prior to the purchase of a home with ADDI assistance. ADDI funds may be used to purchase one- to four- family housing, condominium unit, cooperative unit, or manufactured housing. Additionally, individuals who qualify for ADDI assistance must have incomes not exceeding 80% of area median income.

Eligible Activities

ADDI funds may be used for downpayment, closing costs and, if necessary, rehabilitation in conjunction with home purchase. ADDI funds used for rehabilitation may not exceed twenty percent of the participating jurisdiction's total ADDI allocation. The rehabilitation assisted with ADDI funds must be completed within one year of the home purchase.

Funding Status

In FY 2007, Congress appropriated $24,750,000 for ADDI. Previously, Congress appropriated $74,513,000 in FY2003 and $86,984 in FY2004, $49,600,000 in FY2005 and $24,750,000 in FY2006. HUD has issued formula allocations for FY 2007 to assist participating jurisdictions in preparing their consolidated plans.

Obtaining Assistance

First, check the formula allocation page to determine whether your local HOME administering agency received ADDI funding. If they did not receive ADDI funding, ADDI funds may be available through your state. Every state received ADDI funds. The contacts for state are available in the HOME administering agency list.

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#6) On October 07, 2008 at 6:54 PM, SemperGumby77 (56.77) wrote:

This is a ridiculous post. I suppose that the reason that it comes at you so fast is so that you don't stop to consider how  "The Democrats Blocked It" when the period of time described constituted a time when Democrats had no majority in either the Senate or Congress.

And to suggest that the Democrats forced Wall Street into predatory lending practices? That's a level of ludicrous, I can't even begin to address.

Though it would be accurate to say that there have been mistakes made by both the well-meaning (The Carter Administrator) and the greedy (Wall Street), I ultimately hold responsible those who were in power at the time that this issue really became a problem- the period of time between 2000-2006. This was the period of time when the Republicans had majorities in every branch, and still did nothing.

What's worse is that even now, the "solutions" offered by the Bush Administration do nothing to address the real issue (which is falling housing prices) and instead focus on pawning off Wall Street's problems on the American taxpayer.

Ultimately, the Bush Administration will rightfully go down as the worst in American history, and the democrats in Congress for their part deserve blame for allowing him to fear-monger them into supporting his wars, policies and bailouts for the rich.

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#7) On October 07, 2008 at 7:55 PM, bdash (27.50) wrote:

Oh, Dakota I hoped you haden't sunk to this level. This is about as accurate as the videos out there saying Bush blew up the trade towers. I watched the first min or so of the video and was disgusted. In case no no noticed subprime loans became a noticable % of the loans made after 2001. And of course all republicans want to pin it on clinton....

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#8) On October 07, 2008 at 8:06 PM, DeerHunter73 (73.04) wrote:

LOL @ jessie ventura he should go back to wrestleing lmao.

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#9) On October 07, 2008 at 10:10 PM, Option1307 (29.69) wrote:

Does nobody want to mention that this crap started over ten years ago?? The clinton administrations "claim to fame" was that it pushed for home ownership for lots of low income/minorities...Seemed like a good idea at the time, except now they are defaulting on their payments...

 Don't be ridiculous, all sides (rebuplicans and democrats) are guilty. Both sides in congress, and presidents have pushed home ownership because they claim its a right. F that, not so. Home ownership is a privaledge, not a right. But politicians pushed it so hard, forced FRE/FNM to take on loans from low income poeple, and now these loans are defaulting, gee, what a surprise.

 

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