All right, all 3 at once
1) Loans such as sub-prime and int. only or reverse are gone.
2) Many people purchase a home as that, a home, not something they plan on drawing equity from on a whim or using to bulk up a portfolio.
3) The value assigned to the property is the assumed value by the buyer.
4) The assigned value to a property is the estimated lowest value of the home on the real estate market.
5) Banks pad their initial risk with interest rates.
6) Banks essentially assume no risk after the loans are sold in bulk on Wallstreet.
7) If the loans go belly up, the new package holding bank has the bag.
8) If the lender is doing their job and forecasting value of an area, why should it be such a risk to assume the value? How long has it been since there has been such a housing crisis (20+ years by my count if you go back to the early 80's)? The over-valuing of a property is what leads to a problem like we have now. Supply and demand are a part of the problem. A product is being given a false price tag, the return is a domino effect on every aspect; from selling a home, to refinancing a home, to purchasing a home, to equity against a home. All based on an initial false and inflated figure.
9) It shouldn't be possible for someone to lie, especially in these numbers, on a loan application. It is the lenders job to discover that prior to cutting a check. But that is a whole other topic, lending money as opposed to valuing an asset.
10) Sounds nothing like socialism, no one dictates you buy a home, no tax payer covers it. What we have now is completely corrupt Capitalism. And our collective response has been "well we will help with tax money", that is socialism.
11) And leasing a car or buying a car is in no way comparable to a home in which a person may stay their entire life. And I fathom that 99.9% of vehicle owners understand that purchase of a car will depreciate in value over time. Which is exactly it, there is nothing that is comparable to the situation of valuing a home.
And IMO the lot vs house cost in Cali, is the sole reason Cali is one of the WORST sub prime markets. Viewing a home as an equity driving portfolio asset is not common place. That is a recent 'phenomenon'.
Again, IMO, you don't have to agree and I've yet to see a concrete reason why backing the value wouldn't work. It is essentially what a Fannie/Freddie backed loan is to Wallstreet.