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Thursday, May 8, 2008

A Troubling Mortgage Quote From a Pol

First, the hat tip goes to Erick Erickson over at Red State for pointing this out. Congressman Tim Mahoney had this to say about the mortgage crisis.

President Bush and House Republicans have attacked the legislation as a bail out for bad lenders and for people who took on risky loans. They said the Democratic plan is too expensive and a more scaled back approach would address the issue.

But Mahoney said Republicans have it all wrong. He said because Florida’s housing prices were so high, many families turned to sub-prime mortgages as their only avenue to get into homeownership.

Now, besides being entirely inaccurate, what this quote does is perpetuate a long standing narrative among most politicians that the borrowers were themselves infallable, and thus, all the blame goes to the mortgage professionals. This world view grows more and more dangerous everyday because the amounts of money that politicians are planning on spending will continue to grow.

It is simply startling that a politician with the power the significantly affect the direction of the future of the mortgage market would make a statement so grossly inaccurate. First of all, folks turn to sub prime because their credit profile forces them to. Either they have little or now money to put down, their credit is weak, or they simply didn't have enough income, or any one of hundreds of other reasons why they wound up going to sub prime. To say that people went to sub prime because prices were too high is down right looney.

First, no matter how high prices got folks could always find properties that were affordable. They just may not have found them in the neighborhood they wanted to live in, or GASP, they might have had to settle for a smaller property. Such are the things that people sometimes have to do. One of the nexus of the mortgage crisis was that many borrowers refused to sacrifice anything and wound up buying properties they couldn't afford. Transferring the responsibility from the individual to the market for this is unfair and untrue.

Second, sub prime may in fact have been the only option for some folks, but that had nothing to do with the price of real estate. The fact is that sub prime expanded significantly in the past several years. Many folks that would not have been able to buy a property suddenly found themselves qualifying for loans. That had nothing to do with the price of real estate.

Now, Mahoney is going to use this false narrative that commoners were forced into sub prime as the only means of enjoying the American dream. He will use this as the basis of a multi HUNDRED BILLION dollar bailout. Unless the media calls him and others like him on their false narrative, he will get away with it.

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