The American Dream Downpayment Act of 2003 was a small but symbolic law whose passage by Congress signified victory for George W. Bush in his war on traditional mortgage credit standards such as downpayments and income disclosure that began with the 2002 White House Conference on Increasing Minority Homeownership. Bush signed the bill in late 2003, signaling to the real estate and finance industries that both the White House and Congress were cool with manic mortgage lending.
The Housing Bubble thus inflated in 2004 and metastasized in 2005, leading to the collapse that started in the subprime industry in 2007 and spread to much of Wall Street in 2008, setting of the great recession that took down Main Street in 2009.
So, it’s worth looking at the diversity rhetoric Bush used to justify his bill.
Remarks by the President at Signing of the American Dream Downpayment Act
Department of Housing and Urban Development Washington, D.C.
December 16, 2003
THE PRESIDENT: Thank you all. … I am here today because we are taking action to bring many thousands of Americans closer to owning a home. Our government is supporting homeownership because it is good for America, it is good for our families, it is good for our economy.
One of the biggest hurdles to homeownership is getting money for a down payment. This administration has recognized that, and so today I’m honored to be here to sign a law that will help many low-income buyers to overcome that hurdle, and to achieve an important part of the American Dream. …
This administration will constantly strive to promote an ownership society in America. We want more people owning their own home. …
The rate of homeownership in America now stands a record high of 68.4 percent. Yet there is room for improvement. The rate of homeownership amongst minorities is below 50 percent. And that’s not right, and this country needs to do something about it. We need to — (applause.)
We need to close the minority homeownership gap in America so more citizens have the satisfaction and mobility that comes from owning your own home, from owning a piece of the future of America.
Last year I set a goal to add 5.5 million new minority homeowners in America by the end of the decade. That is an attainable goal; that is an essential goal. And we’re making progress toward that goal. In the past 18 months, more than 1 million minority families have become homeowners. (Applause.)
And there’s more that we can do to achieve the goal. The law I sign today will help us build on this progress in a very practical way. Many people are able to afford a monthly mortgage payment, but are unable to make the down payment. So this legislation will authorize $200 million per year in down payment assistance to at least 40,000 low-income families.
Obviously, the amount of money was a pittance, but Bush fought for the bill as a symbol that Congress was on board with his anti-downpayment stance.
… And thirdly, we want to make buying a home simpler. Many first-time buyers look at the paperwork from a loan application, and frankly, get a little nervous about all the fine print. Those forms can be intimidating to the first-time home buyer. They can be intimidating to the second or third-time home buyer, too. (Laughter and applause.) So this administration has proposed new rules to simplify the forms home buyers and homeowners fill out when they apply for a loan or close on a mortgage.
In other words, to allow sketchier documentation.