VIEWPOINT: Our System for Housing Finance Must Be Fixed
Egan, Conrad, American Banker
Byline: Conrad Egan
The foreclosure crisis has made one thing very clear: It is time to get back to basics by putting consumers first.
This is particularly true when it comes to strategies for repairing the housing finance system. Precipitated by loose lending practices and unregulated financial products, the foreclosure crisis has reemphasized the need for the federal government, in partnership with the private sector, to develop more practical, straightforward housing finance policies focused on better meeting the needs of consumers.
To help ensure this goal's achievement, the government must maintain its key role in the housing finance system even after the current crisis has abated. With private lenders and mortgage insurance companies continuing to tighten credit standards, Fannie Mae, Freddie Mac, the Federal Home Loan banks and Federal Housing Administration/Ginnie Mae or their successor agencies must continue to play central roles in providing funding and liquidity for new mortgages as part of the secondary mortgage market.
Absent a federal role in the housing finance system, it is unlikely that the private sector alone would be able to supply long-term, fixed-rate financing for single-family and multifamily affordable housing in all markets at all times and on reasonable terms.
The government and the private sector must also focus on supporting more balanced housing policy - that is, recognizing the importance of both homeownership and rental housing options to address the needs and interests of individuals and families nationwide. This means supporting programs that ensure access to credit for both owner-occupied and renter-occupied housing. Though homeownership is an important goal for many Americans, it is essential that the housing finance system also develop a stronger infrastructure focused on supporting rental housing finance, particularly for developers that serve low- to moderate-income families. …