Whenever the Government writes a blank check to the housing industry, some sort of scandal is likely to result. Under the Federal Housing Administration's long defunct Section 608 program, builders in the early 1950s ended the postwar shortage of rental housing by erecting half a million apartments. In the process, many builders pocketed millions of dollars of unearned profit from mortgage loans that exceeded the cost of construction. The loans were based on FHA cost estimates, and nobody had told the agency to check on whether its estimates exceeded costs actually incurred. They often did. The upshot was the...
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