The Age of Obama and the Lessons of the The Age of Obama and the Lessons of the 1930s1930s

Institute for Research on Labor and Institute for Research on Labor and EmploymentEmployment

October 29, 2010

John M. Quigley

Housing Bubble and Bust

Obama Administration Mortgage Programs: October 2010

Home Affordable Refinancing~ borrowers current on payments~ mortgages guaranteed by F&F

Home Affordable Modification (HAMP)~ borrowers who owe less than $725K~ hardship (medical bills)~ P/I greater than 31%

Second Loan Modification~ HAMP participants

Home Affordable Foreclosure Alternatives (HAFA)~ short sales~ deed in lieu of foreclosure

* But one out of six modifications is currently 60 days past due

Hardest Hit Fund~ $600M to 5 HFAs

$1.4M “trials” *

$0.5M “permanent” *

$1.7M *

1. Housing Prices

2. Housing Construction

3. Mortgage Market

Distressed Sales as Percentage of Total Sales

1. Administration Programs of Very Limited Importance

2. Aggregate Demand of Great Importance

3. Bleak Outlook for Housing Starts, Housing Prices