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A decline in the national housing price level would need to be substantial to trigger a significant rise in foreclosures, because the vast majority of homeowners have built up substantial equity in their homes despite large mortgage-market financed withdrawals of home equity in recent years.
--
July 2005, in testimony to the House Financial Services Committee.

 

Alan Greenspan

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Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans. Despite the long-term damage to the economy inflicted by the government’s interference in the housing market, the government’s policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.

 

Ron Paul

 

Reckless people have deluded themselves that this was a subprime crisis. But we have problems with credit-card debt, student-loan debt, auto loans, commercial real estate loans, home-equity loans, corporate debt and loans that financed leveraged buyouts... We have a subprime financial system, not a subprime mortgage market.

 

Nouriel Roubini

 

Unfortunately, throughout the housing crisis we’ve seen innocent homeowners who have been victims of shady mortgage lenders and unscrupulous individuals who have used a down market to line their own pockets at the expense of others. This bill is designed to send a message by revising our laws to ensure criminals are brought to justice and that law enforcement has the tools to uncover these fraudulent schemes and go after the bad actors. Criminals should be put on notice that ripping off homeowners and taxpayers won’t be tolerated.

 

Chuck Grassley

 

To entire sincerity there belongs ceaselessness. Not ceasing, it continues long. Continuing long, it evidences itself. Evidencing itself, it reaches far. Reaching far, it becomes large and substantial. Large and substantial, it becomes high and brilliant. Large and substantial; this is how it contains all things. High and brilliant; this is how it overspreads all things. Reaching far and continuing long; this is how it perfects all things. So large and substantial, the individual possessing it is the co-equal of Earth. So high and brilliant, it makes him the co-equal of Heaven. So far-reaching and long-continuing, it makes him infinite. Such being its nature, without any display, it becomes manifested; without any movement, it produces changes; and without any effort, it accomplishes its ends.

 

Confucius

 

House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals, including robust growth in jobs and incomes, low mortgage rates, steady rates of household formation, and factors that limit the expansion of housing supply in some areas.

 

Ben Bernanke