Long-term housing prospects hinge on an economic recovery for working Americans first – No housing bottom until middle class recovers a foothold in th

The housing market can have no sustainable recovery without the employment market improving. It is incredible that over three years into this crisis that there has been little focus on coupling employment with housing. Banks argue that many are simply not paying their mortgage yet they want the Federal government to ease lending restrictions. Who are they going to lend to? Over 95 percent of all mortgages now being originated are government backed. It is disturbing that all bank bailouts including the Fed forcing the interest rate lower merely focus on one aspect of the financial equation. The reality is, without a burgeoning middle class housing will never recover. Even the rising default rates in government backed loans, many “plain vanilla” loans are defaulting in record numbers because people are not able to service their debt.

We need a backdrop to the current foreclosure problems. The financial industry simply dominates too much of our economy and now has deep connections in our political system. Let us first look at mortgages currently in foreclosure: (more)