Home › News ›

Bailing Out the Mortgage Market

Posted by: Nate Berg

28 January 2010 - 7:00am

The housing market -- and especially the exurban housing market -- played a major role in bringing about the current economic recession, according to this piece from Christopher Leinberger. He says sprawl is unlikely to regain its lost value.

The bailout of the housing and mortgage market has turned out to be much more expensive than the other bailouts. And as Leinberger writes in The New Republic, much more may be riding on the mortgage industry bailout.

"As reported on the front page of the Washington Post earlier this week, the Federal Reserve, the Treasury, and Fannie Mae and Freddie Mac have spent well over $1 trillion over the past year in propping up the securitized mortgage market and assuming untold risk of further mortgage defaults in the future. This is more than the bailout of the banks, AIG, and the car companies combined.

This mortgage bailout and the assumption of huge future risks were made in the hope that troubled housing, much of it on the fringe, will stabilize and regain its value. To some extent, it is a bet that sprawling development will recover its previously inflated value, a wager I’d decline."

Full Story: Has Sprawl Recovered Enough for the National Economy?
Source: The New Republic, January 27, 2010
»
Bookmark and Share
“
The decision to abandon a property is a symptom of the loss of confidence. And while abandonment certainly affects confidence among surrounding homeowners, the most important question to answer is not "how do we deal with abandoned properties?" but "what is the most cost-effective way to restore market confidence, and how do abandoned properties fit into that picture?"
”