Politic365

 
 


Policy

12:40pm May 25, 2013

Time to Modernize Housing Finance

house3

By Rep. Carolyn Maloney (D-NY)

President Obama has nominated Rep. Mel Watt (D-N.C.) to head the Federal Housing Finance Authority (FHFA). I applaud the president for his decision.

Watt will be an outstanding FHFA director, and I hope the Senate confirms him as soon as possible. Congressman Watt’s nomination also provides our country with an opportunity to debate one of the most important things we can do to improve our economy: housing finance reform.

In April, housing prices posted their largest annual increase in nearly seven years, according to the Standard & Poor’s/Case-Shiller Home Price Index. While on the surface this increase may seem like a healthy economic indicator, a deeper examination of the housing market reveals a more complicated picture: Housing inventory is at historic lows; Fannie Mae and Freddie Mac remain in government conservatorship and guarantee nearly 90 percent of new mortgages; mortgage origination levels are below what they should be in a healthy economy; and the homeownership rate is on the decline.

All of these trends represent real drags on economic growth. As Mark Zandi of Moody’s Analytics has stated, spending around housing accounts for nearly 25 percent of gross domestic product. This means that even small changes in the housing marketing can have a big change on our economy.

Consider these facts. Before 2000, the U.S. homeownership rate was approximately 64 percent. Then from 2000-2008 it shot up to over 69 percent.

Today, the homeownership rate is back down to 65 percent. The problem in the near term is that we have approximately 6 million Americans severely delinquent on their first mortgages and at or near the foreclosure stage. Those individuals represent a 2 percent drop in the homeownership rate. That kind of drop puts our economic recovery further at risk.

Some have suggested that a growing economy will help lift us out of the housing crisis. Yet it’s been nearly five years since the housing crisis began, and with 2.5 percent increase in GDP in the first quarter of 2013, we can no longer wait for this theory to play out. Rather, we need a focused and sustained effort on both growing the economy and protecting homeownership to get us back on a healthy economic footing. We needed it four years ago, and we still need it today.

Congress is currently deliberating the future of the FHA loan program and GSE (Fannie and Freddie) loans in the mortgage market. I, for one, believe that approach looks at the “sum of its parts” and not the whole. The question we really need to ask is: “How do we structure a housing finance system where both private capital and government backed mortgages can co-exist and not compete for the same customer?”

The status quo is not a long-term solution. And despite the fact that the GSEs have been profitable over the last two quarters, Congress and the Obama administration clearly have to institute reforms. The House Financial Services Committee (and my Capital Markets and GSE subcommittee, in particular) and the Senate Banking Committee are in the information gathering phase before we begin to draft legislation.

Homeownership is an important component of our economy and essential to our country’s social fabric and culture. If the American middle class wants to feel hopeful about the future, we have to get a modern housing finance market system in place very soon.

Maloney is a senior member of the House Financial Services Committee and serves as ranking member on its Capital Markets and Government Sponsored Enterprises subcommittee.

 



About the Author

Guest Contributor
Guest Contributor
The ideas and opinions expressed in this article are solely those of the author, and have complete editorial independence from any Politic365 partners, sponsors, or advertisers. For additional information about Politic365, please visit http://politic365.com/about/.




 
 

 
pence1

Results: LGBT Lobby Demonstrates How Pressure Gets Results in Politics

How Economic Pressure Works.  Wanna watch how green politics on a blue agenda item works in a red state? Watch Indiana right now.  The tipping point is right now as we see Indiana Republicans turn against their own.  As you&...
by Lauren Victoria Burke
0

 
 
16491577129_5c4a442f19_k

Marco Rubio to enter presidential race on April 13

According to a new report from Bloomberg, Florida Senator Marco Rubio will announce that he is going to enter the race to be the Republican nominee for president on April 13: “Senator Marco Rubio plans to announce his cam...
by Adriana Maestas
0

 
 
senator6

6 Black U.S. Senators in 2017?

Six in 2017? Could it happen that there will be six African Americans sworn-in to the U.S. Senate in January 2017? (CA) Kamala Harris (IL) Robin Kelly (MD) Elijah Cummings/Donna Edwards (NV) Steve Horsford? (SC) Sen. Tim Scot...
by Lauren Victoria Burke
0

 

Advertisement
 
pence4

Indiana Governor Just Can’t Say “No” to LGBT Discrimination

In a failed attempt at misdirection, double talk and dodged questions, Indiana Gov. Mike Pence made the mistake of saying yes to a twenty minute interview with ABC’s George Stephanopoulos.  What Pence failed to do is giv...
by Lauren Victoria Burke
0

 
 
Screen Shot 2015-03-27 at 9.38.25 AM

Senator Harry Reid announces retirement, eyes turn toward Nevada’s Latino electorate

Today Nevada Senator Harry Reid announced his retirement. The Senate Minority Leader insisted that this announcement had nothing to do with a recent eye injury, and it is being reported that Reid had made this decision privatel...
by Adriana Maestas
2

 




10 Comments


  1. Have you ever considered about including a little bit more than just your articles? I mean, what you say is fundamental and all. However think about if you added some great images or videos to give your posts more, “pop”! Your content is excellent but with images and video clips, this blog could definitely be one of the best in its niche. Amazing blog!|


  2. Hi, I think your site might be having browser compatibility issues.
    When I look at your blog site in Safari, it looks fine but when opening in Internet Explorer, it has some overlapping.

    I just wanted to give you a quick heads up!

    Other then that, excellent blog!



Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>