In the wake of the mortgage meltdown, a dangerous theme is emerging. On its face, it seems perfectly reasonable and even attractive, especially to the youngest generation of workers, who is already mired in student loan debt, credit card debt, and struggling to find a job. It goes like this:

The U.S. has long seen home ownership as an unquestioned virtue, dating to a 1918 government "Own Your Own Home" campaign. Herbert Hoover, Franklin Roosevelt, Bill Clinton and George W. Bush all talked as if owning a home was the only way to join the middle class. Not only did it promote social stability—recall Mr. Bush's "ownership society"—and build well-maintained neighborhoods, home ownership became a hedge against inflation and a way to save for retirement. Until it didn't. [read more...]

And also:

Some of those new homeowners, including those sold outrageously inappropriate subprime loans, should have remained renters. Many couldn't afford to maintain the houses they bought. Others were dependent on refinancing to keep their homes, an approach that worked only as house prices kept climbing. They didn't. At last tally, the U.S. home ownership rate was at 67.2% and sinking.

Even NPR has jumped on the story.

"The world we live in today is not quite the world that existed in 1950," he noted. "The nature of households and the rate at which they dissolve and reform, the nature of work and its transient nature across geographies are all things that suggest that maybe, just possibly, a middle-class American shouldn't stake themselves to an illiquid, very large, concentrated, leveraged asset —- that is to say, a house." [read more...]

Everything old is new again. Both of these articles blame Fannie Mae and Freddie Mac for the mortgage meltdown, when the opposite is true. It isn't the middle class, minority or lower income buyers who caused the meltdown. In fact, the wealthy walked away from their mortgages when they found themselves upside down in a weak housing market -- not the middle class.

The subprime market made a lot of money for a lot of people. Easy credit and low interest rates enabled homeowners to sell for prices far above a realistic market price, while misleading buyers into believing they could actually afford a home at a price that was two to three times the value of the property. It drove developers to build at a record pace and in some cases, to self-finance their developments so they could pull more profit when the developments sold.

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