The big numbers of American homeowners who are struggling to make their mortgage payments provides new evidence that government should not rig the housing market – or any market – to pursue poorly defined social aims such as “fairness” and “affordable housing.”
The latest figures from the Mortgage Bankers Association show that a shocking one in 10 U.S. homeowners has missed one or more mortgage payments.
While not every neighborhood is “typical,” look around your own neighborhood and imagine what it would be like if, in fact, one of every 10 of your neighbors – perhaps you! – had missed at least one house payment and could be on the path to foreclosure.
Foreclosures have already been skyrocketing. If very many of the homeowners who have missed one or more mortgage payments actually went into foreclosure, that would harm not only them directly but other homeowners indirectly, by making their homes worth far less because of the glut of troubled homes on the market. That would not be “fair” to anybody.
The Chattanooga area is fortunate to have Volkswagen and some other big economic developments coming, which will help stabilize the local housing market. But the very high nationwide rate of foreclosures and the huge numbers of homeowners who are having trouble scraping together their payments are alarming nonetheless.
They also show why the federal government was wrong to encourage and sometimes pressure banks to make home loans – particularly adjustable-rate loans whose payments increased sharply after an introductory period – to people who were poor credit risks.
That was done in the name of “affordable housing” and “fairness,” but we doubt that people who are losing or may lose their homes to foreclosure think the government’s actions were either “affordable” or “fair.”