Last week, I had the opportunity to participate in a HUD-Treasury Conference on the Future of Housing Finance in Cleveland. I was part of a panel titled “Housing Finance Reform and Broader Housing Policy Goals,” and there was a lot of discussion around how much of a role the government should play in the housing market.
Currently, FHA, Fannie Mae and Freddie Mac together account for 90 percent of the mortgage market. That’s definitely not a healthy level. But, that doesn’t mean the government should stop supporting homeownership.
As I mentioned in Cleveland, homeownership is one of the best investments that we can make in our communities and our nation. The social benefits far outweigh any investment that we as a nation are making. The problems that we have seen in the housing market are not a result of too much government involvement –quite the opposite. During the boom, credit standards were too liberal, now they have swung too far in the opposite direction.
Clearly, we need a better balance, and the government should help to achieve that. The old GSE structure – public mission, shareholder-owned – was fundamentally flawed. We need a better secondary market; one that has a strong regulator, an explicit guaranty, and is free from shareholder interest.
At the same time, we need to find better ways to provide for low and moderate-income housing, by strengthening programs like FHA and avoiding unreasonable goals that can actually undermine responsible lending.
Most importantly, now is not the time to change policies that work. The 30-year fixed mortgage has proven to be a safe and affordable product. Likewise, tax incentives are important to the working-class homeowners who pay the majority of income taxes.
There is room for improvement, and the Treasury Department is reaching out to the industry for ideas on how we can re-shape our industry for the better. I am proud to say that NAR is doing our part to lead these discussions and to remind our policymakers that Home Ownership Matters to people, to communities and to America. – Vicki Cox Golder, 2010 NAR President