Despite mortgage interest rates falling to near all-time lows, America's homeowners are in a state of unease not seen since the Great Depression. In 2009, nearly 4 million foreclosure notices went out to homeowners unable to keep up with their payments, an increase of more than 20 percent from 2008. Many explanations lie behind this collapse, but arguably the most crucial, and underappreciated, has been excessive federal intervention in the housing market. Recent reports and articles from American Enterprise Institute (AEI) Senior Fellow Peter Wallison and AEI Visiting Fellow Charles Calomiris strongly suggest the pileup of bad mortgage paper has the words "Made in Washington" written all over it. In other words, rogue capitalism is partly to blame, but rogue government has played a central enabling role.
