Housing market took risks

Bush Economic Adviser Keith Hennessey said an "oversupply of houses" has contributed to the significant downturn in housing markets. He said that as long as there is an oversupply, a downturn will continue.

At a summit on housing, Hennessey said that mortgages have been "sliced and diced." Hennessey said these bad mortgages have contributed to "downside risk" in the economy, which has culminated recently in the bailout bill by Congress.

Federal Housing Administration (FHA) Commissioner Brian Montgomery said the FHA's goal for homeowners is "sustained ownership." He said the goal is not to give homes to those who financially cannot handle the costs. He called the subprime loan crisis "fool's gold" for its low initial costs followed by higher costs later.

Montgomery, who also is Assistant Secretary of Housing of the U.S. Department of Housing and Urban Development (HUD), said the goals of HUD are to "try and save the hundreds of thousands in foreclosure," and to maker sure the current housing crisis "never happens again."

HUD Director of Single Family Program Development Meg Burns talked about two programs recently enacted designed to help homeowners. She said both the "Housing and Economic Recovery Act of 2008" and the "Hope for Homeowners" rollout are designed to create fair payments for both borrowers and lenders. She said one difference between the two is that the Housing and Recovery Act is designed to help those "in a state of delinquency" due to job loss or medical problems, while Hope for Homeowners is for those "who should never have become homeowners in the first place."

Burns's advice to all homeowners who are having financial difficulties is to "call your lender."