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





 
 

 
unnamed

Lorretta Johnson: Breaking Barriers and Uniting Educators

For the last 50 years, Lorretta Johnson has advocated for educators across the country. Her journey has taken her to the poorest neighborhoods in the United States, to the Rose Garden of the White House, and all around the worl...
by Sam P.K. Collins
0

 
 
2015-03-04_9-30-21

Voto Latino Innovators Challenge: the tech competition to address problems in the Latino community

Today in Washington, D.C. a group of young Latinos will present their technology related projects that address problems in the Latino community to a panel of judges. In recent years, the lack of diversity in the technology indu...
by Adriana Maestas
0

 
 
smartphones-computers-texting

Protecting and Advancing Florida’s Position as a Technology Leader

By David Grain, Founder and Managing Partner, Grain Management, LLC In the aftermath of the Federal Communications Commission’s (FCC) historic vote on net neutrality, policymakers in Washington will continue to debate how to ...
by Guest Contributor
2

 

Advertisement
 
MD-Senate

A Black U.S. Senator from Maryland?

Sen. Edwards, Sen. Cummings, Sen. Alsobrooks, Sen. Blake or Sen. Brown? With today’s announcement from Senator Barbara Mikuski (D-MD) that she will retire in 2016, there is a wide open opportunity for a Black Democrat in...
by Lauren Victoria Burke
1

 
 
immigration7

Losing 2016: Republicans Change Nothing on Immigration

Republican National Committee Chairman Reince Priebus said it all pretty clearly in January 2013.  Clearly some in the Republican party were not listening.  Instead, Republicans appear to be “strategizing” to make...
by Lauren Victoria Burke
1

 




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>