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There Are Many Reasons For The Housing Collapse - Here's A Congressional Report On The History Of One

Few will doubt that the housing collapse has many partners, but one of the recurring themes is the role of Fannie Mae and Freddie Mac in our current financial crisis.

The Congress has issued a report, "The Role of Government Affordable Housing Policy in Creating the Global Financial Crisis of 2008."

A couple of the conclusions which are detailed in the report are:

  • Political pressure on Fannie Mae and Freddie Mac led to the erosion of responsible lending practices.
  • Housing prices outpaced income due mainly to lower downpayment requirements.
  • Fannie Mae and Freddie Mac were leaders in risky mortgage lending practices.
  • The role of government intervention was significant in causing the financial collapse.

One of the architects, who helped create the problem, Fannie CEO, Franklin Raines, earned over $90 million dollars in compensation in six years.

The report is only 26 pages long and won't make the summer best seller list for reading on the beach. 

I suspect it won't get much play because the largely historical report was put out by Republican members of the House Oversight Committee. That being said, I did read the report and it is a bipartisan, historical representation of the role of GSE's in the collapse.

Every Congressional representative should read the report to understand how undue political pressure can have unintended, disasterous consequences. We certainly don't want to see ourselves in another housing mess after we somehow manage to climb out of this one.

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Richard Iarossi, REALTOR®
Long and Foster® Real Estate, Inc.
Crofton, MD 21114
410-451-6255 Office
443-995-9595 Cell
Web: http://www.RichSellsHomes.com
eMail: Rich@RichSellsHomes.com


Annapolis MD Real Estate Specialist
Bowie MD Real Estate Specialist
Crofton MD Real Estate Specialist

54 comments • Richard Iarossi, Crofton MD Real Estate, Annapolis MD Real Estate • July 10 2009 11:09AM