Of course, one could expect that the NYT would begin to highlight the problem only after it arrives: Slowing Is Seen in Housing Prices in Hot Markets
While Media Transparency says that Faith-based charity fueled the housing bubble, MSN's Fleckenstein, in his article "Empty houses, falling prices: A boom dies," says it's really more of a credit bubble than a housing bubble. Fleckenstein concurs that the bubble is partly the result of dubious practices where inevitable foreclosures escalate to force more and more people, especially low-income people, out of their homes and into financial ruin. One dubious method, published in a September 19 Columbus Dispatch article entitled "Loophole Fuels Zero-Down Mortgages," includes the following:
Homebuilders across the country, including Dominion Homes, have found a way around a Federal law barring sellers from giving money directly to buyers for a down payment. They route the money through charities such as the Nehemiah Corp. of America, a faith-based group in California. Nehemiah provides down payments for both existing and new homes, and its relationship with Dominion is the largest of its kind in central Ohio between a builder and charity.
Nehemiah uses a loophole in federal regulations that allows charities to provide the 3% down payment required to qualify for Federal Housing Administration mortgages. An uncounted number of copycats have followed, leading to an explosion of 'zero-down' loans. Federal authorities do not regulate or track such organizations.
Such foul practices entice many poor people to finance beyond their means and inevitably take a major loss when they are forced to sell their homes at a depreciated value, far less than what they invested in them, or else loose-out to forclosure. With this being perfectly legal, one can imagine that the scam will be used as template for builders and faith-based charities to cash-in on Katrina victims, at least while the getting is still good.
Thomas Leavitt (at Seeing the Forest for the Trees) has followed the political money trail of Dominion Homes using Political Money Line where anyone is welcome to try their own luck at connecting the dots between money and politics.
For now, I'm content to leave it as mere "theory" that Greenspan wanted to keep secret an alleged deliberately-constructed housing bubble. But, Carolyn Baker may well be onto something as she argues that New Orleans was just a dress rehearsal for a lockdown on America !
BEWARE!
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