First, some full disclosure: In my day job I have a number of mortgage lending industry clients.  None of them knows about or were involved in this post in any way.

Dean Baker has a post today using his usual excellent analytic abilities to dissect a story in today's New York Times about the current state of the mortgage issue.  While I don't always agree with Dean's sense of outrage, his post is definitely worth looking at after you read the Times.

One thing the article and Dean fail to point out is that the housing/mortgage crisis isn't really one problem; it's a steady series of different problems that absolutely defy a single or simple solution.  Lumping them together as "The Crisis" as the Times does complicates the public policy process.

Just as students are about to apply for their loans for next fall, many lenders have stopped making student loans. This week, two of the largest, Citicorp and Bank of America, pulled out. Higher educational institutions are rapidly switching back to direct loans from the government, but the Department of Education may be swamped despite the fact that no student has been denied a loan yet and despite DOE's claims that it's ready to make loans that private lenders won't.

Sallie Mae's CEO Albert Lord wrote two days ago in Wednesday's quarterly earnings report, "Today's environment is the most difficult we have seen in our 35-year history of student lending. It has become obvious that we can only meet the enormous student credit demands we are seeing at Sallie Mae if there is a near-term, system-wide liquidity solution."

Every American supposedly dreams about living in/owning their own home. 

That's a romantic formulation: we all dream about a home where we can provide for our families and everyone wants to have the equivalent of picket fences, front yards, and two-car garages.  That's why being able to buy a home is the goal and federal policy has been devoted to making that easier.

But as I've watched the issue unfold over the past few months, I've started to wonder whether this romantic version of the American Dream is really nothing more than a myth. Would homeownership be as desirable to most people if they thought they would break even or lose money when they sold the house, condo, or co-op?  Would renting then grow in popularity

In other words, is owning a home more one about investing and making money?  Rather than owning their own home, does everyone actually dream about selling it?

I'm rapidly coming to this conclusion because it's one of the only ways I know to explain the emotions that seem to be so much a part of the current issue. 

That was quite a speech former Fed Chair Paul Volcker gave to the Economic Club of New York yesterday. He recalled his stand against bailing out New York City and the beneficial long-run effects that resulted. Then he contrasted that with recent Fed actions under Ben Bernanke.

I strongly disagree with what seems to be the growing opinion that borrowers, specifically those who got mortgages the past few years, had little or no responsibility to read and understand the documents they were signing and the loan they were getting.  Even when the terms were explained to them, when they were told about possible interest rate adjustments, and when they could have/should have/were in a position to know, borrowers increasingly (and to my mind inappropriately) are being considered unwitting victims.

The Washington Post has a story this morning about a new Bush administration plan to help homeowners who are "underwater," that is, whose home is worth less than their mortgage and can't sell or refinance it because they don't have the cash they would need at closing.  Contrary to the president's often-repeated assertions that he wouldn't do it, the plan apparently will require taxpayer dollars.

Anyone who has watched the mortgage situation deteriorate over the the past year could see this coming.  The early "over my dead body" statements by the administration were slowly, incrementally, and sometimes imperceptively replaced with positions that tilted increasingly toward "not yet."  In other words, it was only a matter of time.