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Donovan: Not Every American Should be a Homeowner

By Ed O'Keefe

Housing and Urban Development Secretary Shaun Donovan says he saw the signs of a national housing crisis during his tenure as New York City's housing chief and suggests in an interview with The Washington Post that home ownership is not for everyone.

"Not every American wants to be, nor should be, a homeowner," Donovan told The Post's Lois Romano for the latest installment of the Voices of Power interview series with Obama administration officials. (Watch portions of his comments in the video clip above.)

"I think what's critical, though, what got us into the mess was a set of mortgage products that shouldn't be offered," he said. "We shouldn't make loans to people when we know they can't afford them. We shouldn't set people up for failure by having rates that increase dramatically. We shouldn't be making loans that are only successful if house prices keep rising indefinitely."

Elaborating further, Donovan said "The real problem here is not whether or not to become a homeowner, but can you find a home that you can afford and a mortgage product that will help you be successful in the long term."

Donovan said his first indications of wider housing issues came in 2005, when New York City began a program to help families taken advantage of by lenders.

"I think there were definitely some early signs that we were headed for trouble in the housing market," he said. The city later expanded the program to provide counseling to more residents.

"One of the things that you see...that oftentimes, families who are in this situation of being behind on their mortgage, they're paralyzed with fear. They are embarrassed to pick up the phone to ask for help, and so we have to get the efforts right" on loan modifications, Donovan said.

Read and see more of Romano's interview with Donovan tomorrow in the pages of The Washington Post and at washingtonpost.com.

By Ed O'Keefe  | April 8, 2009; 7:30 PM ET
Categories:  Administration, Video Report  
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Next: Eye Opener: April 9, 2009

Comments

Bulldinghy!

The Housing Secretary should get together with the Education Secretary and hammer out a method in which a"How to Own a Home" curriculum is included in every high school.

I for one believe MOST Americans should be homeowners.

Is he suggesting that 1% or 2% of Americans should be landlords?

What's wrong with this guy?

Posted by: nestorb98 | April 9, 2009 10:34 AM | Report abuse

Obviously you did not read the article - there is nothing about suggesting 1 to 2 percentage of home ownership. Lenders should not be promoting mortgages to those who cannot afford them - plain and simple. Most Americans should own their home, but they too have to be responsible in being able to handle such a purchase.

Posted by: millertek | April 9, 2009 1:44 PM | Report abuse

My understanding of what Donovan advocates is RESPONSIBILITY... each prospective homeowner taking PERSONAL RESPONSIBILITY for ensuring that he/she is able to meet his/her contractual obligations... the MORTGAGE COMPANIES taking RESPONSIBIILTY in vetting prospective homeowners and offering loans that are stable and within the person's budgetary constraints.

Donovan offers practical, common sense solutions through education and sound business practice.

Posted by: erixonm | April 9, 2009 2:07 PM | Report abuse

I agree with Donovan that not every person or family should be a homeowner. It does take alot of work, time, pride and extra money to keep a home in good shape. Your commitment to this can effect values in your neighborhood.

However, I firmly believe that people who purchased their primary residence, and now cannot afford the payments are a minor reason for the housing crisis.

The problem was not caused by a few loans made to low-to-moderate income families! It is due to greed and fraud by many people of all income ranges!

Most of the loans which have gone into and are going into foreclosure were not within Fannie or Freddie guidelines.

The big problem is greed. Mortgage brokers and companies did not care if the borrowers could pay the mortgage...they made mortgages to meet their quotas and to make their commission! GREED!

The banks and companies did not care if the loans were repaid or not...they bundled the loans up and sold them as investments! GREED!

Realtors and brokers did not care if the buyer could pay the mortgage...they would talk people into buying the most expensive
house they could...for larger commissions! GREED!

There are those who on their own applied for and obtained loans based upon fraudulent applications, putting in many cases millions of dollars into their pockets! GREED!

And those "we buy houses" scum would would talk homeowners into selling them their homes, while the mortage stayed in the sellers name. They promised the seller to make their mortage payments. Then, when they could not rent or flip the house, they stopped paying the mortgage! The original owner could not afford to pay the
mortgage....so foreclosure! GREED! Not by the orginal owner but by the "we buy houses" conman!

These actions, without proper government oversight, thanks to George W cut backs and deregulation, caused this mess, not the few low-to-moderate loans that went bad!

Part of a March 20, 2009 article in the St Peterburg Times sates "... said he made mortgage payments for years on up to 50
properties, employing many workers as he fixed up distressed properties and 'added value to the community'. He said his
'business plan' fell apart only when the real estate market collapsed and he was unable to afford the payments or sell the houses."

It was that type of activity that caused the problem.

GOD BLESS AMERICA!

Posted by: 1FLVoter | April 9, 2009 8:18 PM | Report abuse

Trickle down tax cuts for wealthy, banks flush with cash, demands for higher yeilds, increased risk in loans, bubble, pop, meltdown. Now half of sales are to "investors" - this country will be a land of fiefdoms - there is a furthering of the divide between rich and poor - taxpayers now give money to the banks so that they can borrow it back printing it at zero value, borrow it back at 20% - no manufacturing base, no more housing bubbles - nothing to spur "growth" - a growing lower middle and just plain lower class, increasingly dominated by the higher class through loans and housing rentals - lack of education, keep em dumb and poor - not a new concept - thank you Republicans - just keep em dumb, scared, and poor - control where they live and how much they earn - no wonder they thump their Bibles and chant for "God" to save them. Rise up all ye idiots -

Posted by: JPSweet | April 10, 2009 6:35 AM | Report abuse

Not everyone should be a homeowner, but there should be affordable housing for all. And the best way I know to get there is through land value taxation.

When we tax land value, not a single square foot of it leaves town or gets hidden. All that happens is that it gets put to better use.

And every dollar of tax revenue we derive from a tax on land value is one we don't have to place on buildings, or wages, or sales. Lifting any of those helps the economy and helps the poor.

And when we collect land value to fund government, we reduce the cost of living for most of us.

Henry George had it right. Search on his name, or on "quotable notables" or "quotable nobels" or "lvtfan" to learn more about how his ideas can put us on the road to widely shared prosperity, affordable housing, and, most important, a stable and vibrant economy -- for all of us!

Posted by: lvtfan | April 10, 2009 7:38 PM | Report abuse

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