"A Needless Housing Collapse"

Here's an antidote to the notion that has been aggressively pushed by such sources as the Wall Street Journal's op-ed page and  CNBC's Larry Kudlow that the mortgage crisis was the fault of borrowers and the government, rather than primarily a market failure and eventual collapse triggered by private lending agents who found ways to make short-term profits from aggressively pushing bad loans. The article also shows a promising policy moving forward for borrowers who are in trouble.

From Alyssa Katz at Think Progress:

John Smith's four-bedroom house stands tall on Cleveland's East Side, its tidy cream siding and green lawn oblivious to the devastation that has scarred the surrounding neighborhood. It is everything thousands of foreclosed homes in the area are not: occupied, intact, and still an asset to the family that lives in it. Smith purchased the home in 2005 through a nonprofit dedicated to repopulating the city with working- and middle-class homeowners. But Smith's investment was one of a few drops in a bucket with no bottom: The census tract he lives in, with about 600 homes, has seen more than 200 foreclosure sales in the past 15 years. "We know the inner city is the inner city, and it's no big surprise to us," Smith says. But even he is stunned at the level of devastation around him. "Whole neighborhoods are almost totally down."

The Smith family has come close to the precipice. In 2008, Smith, then 38, lost his job as a financial analyst for a bank and had trouble paying his mortgage. His credit-card debt shot into six figures. When his lender initiated foreclosure proceedings that December, the notice was a month late because the bank did not have the correct address on file for its own borrower.