Don't Mess with the Texas Housing Market

So here's something in Rick Perry's record that'll give our liberal friends cognitive dissonance in coming days. In 1998, following the Savings & Loan debacle, Texas enacted a law­—under none other than George Dubya Bush—limiting mortgage borrowing to 80 percent of the appraised value of a home. My awesome powers of deduction tell me this means that you can't buy a house in Texas without putting 20 percent down. This shielded the Lone Star State somewhat from a housing bubble.

The multi-million dollar question for liberals then is this: Should they hold the tough housing regulations that prevented the free market from running amuck in Perry's Texas as an example for the rest of the country? Or should they condemn Perry for continuing a policy that deprived poor people of homes in direct contradiction to Barney Frank's wishes? Frank, as H&R readers will recall, was for more affordable housing for the poor before he was against it.

Incidentally, for more on how to really fix America's housing crisis and prevent future bubbles, check out Reason Foundation's Anthony Randazzo's excellent study. It recommended getting rid of the mortgage interest deduction because it disproportionately helps useless rich folks even before Warren Buffett started feeling coddled by the oppressively low taxes he has to pay.

Update: Some readers note that they have been able to buy homes in Texas without putting 20 percent down. Here is what the WSJ editorial linked above noted: "…also cited a rule in place since 1998 in the backwash of the S&L debacle that limits mortgage borrowing to 80% of the appraised value of a home. Like a minimum down payment, this reduces overleveraging and means Texas wasn't hurt as badly by the housing crash as other states."

I invite readers to clarify what the actual regulation is if this is incorrect.