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Editorial: A vibrant housing market remains key to recovery
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The Fannie Mae headquarters is seen in Washington, Monday, Aug. 8, 2011. (AP Photo/Manuel Balce Ceneta)
The Republican Editorials By The Republican Editorials
on October 20, 2014 at 10:07 AM

The Great Recession didn't simply happen.

After all these years, folks talk about it -- the global economic collapse that followed the bursting of the housing bubble in 2008 -- as though it had been an inevitability, another part of history, a terrible turn in the up-and-down cycle that is the global economy.

It was, in fact, none of the above.

It was created, and sustained. There were the unscrupulous, fly-by-night lenders who willingly pushed valueless paper out the door, caring only about making more deals, because it was the deals themselves that made money. There were the borrowers who jumped on the bandwagon, who saw a good thing -- buy your dream house with no money down! -- and just couldn't resist, even though there was no way in the world they could afford the type of house they were about to move into. There were the ratings agencies that turned a blind eye to the whole affair, overvaluing packages of mortgages that were selling as fast as they could be produced.

And when it all blew to pieces, the impact was felt across the globe. We haven't yet recovered from the collapse of the house of cards that was the housing market back in the bad old days. Part of the problem is that even good lenders, the legitimate banks that were never a part of the financial shenanigans that created the bubble in the first place, remain spooked. Lenders still aren't much lending, except to the small handful of those with pristine credit and lots of cash to put down, and the overall economy thus remains mired in place.

Thankfully, mortgage giants Fannie Mae and Freddie Mac have an impending agreement with lenders. The deal, set to be announced this week, should go a long way toward freeing up credit that would get the housing market moving again.

The plan, in essence, would hold lenders responsible for making fraudulent loans that fail, but would endeavor to shield them from the repercussions that would otherwise come from a good loan gone bad through circumstances beyond anyone's control.

Without a vibrant housing market, there'll be no real, sustainable recovery. This new program is a solid step.

http://www.masslive.com/opinion/index.ssf/2014/10/editorial_a_vibrant_housing_ma.html