It’s no secret that the collapse of the housing market was at the heart of the financial crisis that started in 2007.  Specifically, a federal push under both the Clinton and Bush administrations to expand home ownership – in large part through government guarantees of risky loans – played a significant role in prompting the economic downturn.

That’s why it’s interesting that the Obama administration is now speaking out against federal policies that encourage homeownership, at the expense of financial responsibility.

According to a report yesterday in The Washington Post(h/t Hot Air):

Responding to the collapse in home prices and the huge number of foreclosures, the Obama administration is pursuing an overhaul of government policy that could diverge from the emphasis on homeownership embraced by former administrations.

“In previous eras, we haven’t seen people question whether homeownership was the right decision. It was just assumed that’s where you want to go,” said Raphael Bostic, a senior official in the Department of Housing and Urban Development. “You’re not going to hear us say that.”

Of course, it’s one thing to make grandiose political statements. It’s very different to follow through with the heavy lifting necessary to effect political change. As Hot Air acknowledges, “The Post notes that La Raza, one of the groups that gains material benefit from participating in government programs for these home-ownership efforts, is already unhappy with the idea.  At a time when Obama’s approval ratings are sinking towards Bush levels, this could alienate his ideological base and leave him utterly abandoned in 2012.”

The political legwork for the Obama administration is going to be even more difficult as the housing market slumps to a new low. The Wall Street Journal reported just yesterday:

In major markets across the country, home sales are deteriorating, inventories of unsold homes are piling up and builders are scaling back construction plans. The expiration of a federal home-buyers tax credit at the end of April is weighing on the market.

As Hot Air makes clear, if the Obama administration instigates “a significant retreat from the government interventions and social engineering that have ruined the American economy,” it would show real leadership and courage.

Dare to dream?