The U.S. Senate should move quickly to confirm Mel Watt as the new head of the Federal Housing Finance Agency (FHFA), but not for any of the political or procedural reasons usually discussed. A quick confirmation is required because we need new leadership on U.S. housing policy — a policy that on some crucial points is headed in the wrong direction for the wrong reasons.
In the years since the collapse of the housing bubble, major Wall Street firms have prospered while millions of homeowners are still dealing with the wreckage of a damaged housing market. That’s in part because nothing as large as a national housing market turns quickly. But it’s also because persistent myths about the market are obscuring the data and driving policy in the wrong direction.
Here are three such myths, and the right way to think about them:
1. The foreclosure crisis is over.
Most news stories today focus on overall foreclosure numbers dropping and home prices rising, but the truth is more nuanced. Prices are indeed up in some wealthier neighborhoods, and foreclosures are dropping in many communities.
But the big foreclosure statistics don’t include the significant number of delayed foreclosure proceedings still pending, and don’t capture the realities facing many communities with high concentrations of poverty. In these communities, where predatory lending practices were commonplace during the bubble, homeowners still need help, and vacant homes are commonplace. The effect on the overall housing market and local business is clear, as struggling owners hold back the consumer spending that drives our economy.
Even the oft-cited “improving” national numbers remain far worse than they were before the bubble. There are 1.3 million homes in some state of foreclosure or owned by banks. The foreclosure crisis continues — and it affects us all.