The housing crisis still has a grip on many states, including Florida. For some, it seemed like a tidal wave that came out of nowhere, leaving millions of Americans trapped in mortgages that they couldn't afford to make payments on. But as the waters begin to calm, many are now asking how we prevent it from happening again.

According to a recent report by the Federal Reserve Bank of New York, there is a new culprit to blame for the housing bubble and subsequent foreclosure crisis. The report concluded that real estate investors who bought multiple homes with subprime credit and low down payments are part of the reason the housing market inflated and then collapsed.

Officials said that the report is part of the government's effort to understand why the financial crisis happened. Up until now, they said, the focus has been primarily on how to stop it.

Researchers pointed to the fact that investors owning three or more properties were the fastest growing group of homeowners during the housing bubble. They said that in states such as Florida, Arizona, California and Nevada, close to half of all mortgage-backed home purchases were made by investors.

Finally, they said that more than a third of all home mortgages granted in the country in 2006 were to people who already owned at least one home. These investors would buy homes, fix them up, and then sell them for a higher price, which helped inflate home prices, researchers concluded.

Then, when home prices began to drop in 2006, many of these investors began to default on their mortgages. In fact, more than a third of loans that were seriously delinquent in Arizona, California, Florida and Nevada from 2007 to 2009 were owned by investors.

Ultimately, the report concluded that these novice investors helped cause the recession, and something needs to be done to prevent it from happening again. They said lenders and regulators should limit speculative borrowing similar to how China now requires higher down payments and mortgage rates for investment properties.

What do you think?

Source: The Washington Post, "Federal reserve report: Home flipping drove housing bubble in Nevada, California, other states," Dec. 12, 2011