Just a short few years ago severalof the major funds and many smaller investors scooped up the singlefamily foreclosure inventory at deep discounts. They swept millionsof houses off the market in a relatively short time span and had ahuge negative impact on the available inventory for individual homeowners who were seeking a well priced home to buy for themselves.This rapid sweep of the inventory also rapidly forced an increasein prices in the most hard hit markets like Phoenix. While I alwaysbelieve it is very good to have the private sector weep away theproblem properties after a serious collapse of the market, theresults from this have had a negative impact on many homebuyers andthe economy potentially.

First time buyers, and those withlower incomes who needed or wanted to buy a well priced house wereeffectively kept out of the market because prices rose too much,andthere was little inventory to purchase in many markets. As pricesrose, many would be buyers were simply unable to execute. There areseveral; other factors which also combine with the lack ofinventory and higher prices, to prevent the housing market fromreally returning to a robust market essential to the recovery ofthe economy. The first is the obscene fines levied by Obama andHolder on the major mortgage lenders to satisfy the populistpolitical rhetoric of get the bankers. The big banks were claimedto have done all sorts of terrible things to the poor home buyerwho lied on his loan app and who took out home equity loans to goon vacations and buy big screen TVs. While the banks were sloppy insome paperwork, the reality was the borrowers were irresponsibleand Barney Frank forced the banks to make loans in neighborhoods weall knew were not sustainable for heavily leveraged home ownership.For Fannie and Freddie and some major institutional buyers ofmortgage backed securities to now claim they were mislead, issimply to say we had no idea what we were doing and we bought theportfolios because the salesman took us to a great strip club. Sonow the White House can say we really got thosebankers. What they fail to say is weeffectively ended the top mortgage lenders from making loans to theaverage buyer, and especially not the first time buyer. The bankshave moved on, but the economy and potential home buyers arescrewed. Just as no banker for generations will ever help thegovernment bailout failed banks like Countrywide or Bear, orMerrill, none will reach to make anything but prime quality loans.So now even Ben Bernanke can't get a refinance of hismortgage.

Add on that thestudent loan burden taken on by over a million students, is goingto inhibit the first time buyer market for many years and in theend will result in another tax payer financed bailout. There is noway over 30% of these kids will ever be able to pay these loans infull, and the result is their credit is damaged long term. Thewhole system run by the government encourages and incentivizesschools to add staff and increase tuition, because the governmentrun loan program is essentially a subsidy to such profligatespending by college and trade schools.