Report: Government is responsible for housing bubble, not banks
...The new report about the housing-bubble was published by the National Bureau of Economic Research, by authors Patrick Bayer, Fernando Ferreira and Stephen Ross.
“More than 1 in 10 black and Hispanic homeowners in our sample had a delinquent mortgage by 2009, compared to 1 in 25 for white households, and a similar pattern held for foreclosure rates,” said the report.
However, “racial and ethnic differences in foreclosure are tiny for homes that were originally purchased from 1998 to 2003 [when the bubble remains small], but substantial for homeowners who originally purchased their homes between 2004 and 2007,” the report said.
“These results call into question the [government policy] of encouraging homeownership as a general mechanism for reducing racial disparities in wealth… [because] such a push may backfire, leaving vulnerable households in a difficult financial situation and adversely affecting their wealth and credit-worthiness for years,” the report concluded....
