The powers that be have nonchalantly admitted that forcing home loans on those who could not afford to pay them off is partly the reason, if not the primary reason for the housing crisis. House Financial Services Committee Barney Frank said there may have been a mistake in approving home ownership for people who could not afford it. The best option for them would have been to rent their homes.

There has been a long term pressure to provide home ownership to a great number of people regardless of the financial capability and this is now being pointed to as the culprit for the bubble burst. Fannie Mae and Freddie have been authorized by the US Congress in 1992 to set out on an affordable housing mission. This started Fannie’s trillion dollar commitment to increase affordable housing financing regardless again of the quality of mortgage they would get.

While the government-created housing bubble is unarguably the cause of the housing problems today, it was fact that 25 million loans or 40% of all US mortgages were of the subprime or low quality type. The housing crisis is primarily blamed on subprime mortgages which allowed home loans to borrowers without down payment, limited income documentation and even to those with blemished credit records.