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





 
 

 
Jesse1

Rev. Jesse Jackson’s Pressure on Big Tech Gets Results, Twitter Reveals Stats

“Rev. Jesse Jackson’s campaign on silicon valley is just as important as a march on police brutality in New York,” said Roland Martin this morning on his radio show News One Now. Rev. Jesse Jackson has been pr...
by Lauren Victoria Burke
0

 
 
computer_science

National Minority Organizations Urge Renewed Focus on Broadband Adoption Amid Net Neutrality Debate

Forty-two national minority organizations representing diverse, multicultural communities filed comments in the Federal Communications Commission’s open Internet proceeding focused on protecting some of the country’s most v...
by Kristal High
0

 
 
pantaleo

Conservative Silence on #EricGarner Case Verifies Black Outreach is a Joke

Eric Garner and Conservative Republican silence.  Where is the shouting about “less government?”  Where are the calls for violations of 4th Amendment rights and police state overreach? Was there conservative suppo...
by Lauren Victoria Burke
1

 

Advertisement
 
10382589_10152331524781551_150485824862705133_o

Report: Obama administration warned of Central American refugee crisis

Over the weekend, the Washington Post published an article detailing the extent that the Obama administration was warned of the surge of child refugees from Central America. The upshot is that the administration treated the inc...
by Adriana Maestas
0

 
 
workF

Pigs Fly During Do-Nothing Congress: Chaka Fattah, Gillibrand + GOP Pass Urban Jobs Bill

Last week as everyone was paying attention to the crisis at the Mexican border, violence in Israel, and shootings in Chicago, Congress actually got something relevant done.  Although the 113th Congress is set to be the least p...
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>