Should it be easier for Americans to buy a home?

I have a simple question:  Should it be easier for people to buy a home?  
 
Photo courtesy of britannica.com


There are many out there who see home-ownership as a God-given right.  How dare these greedy lenders be so strict with their lending requirements!  Right?
 
Well, when I take stock of the Great Recession we just went through (some would argue we’re still there), it seems pretty obvious that the 2007 housing bubble pop was the primary cause.  But what caused the housing bubble in the first place?  Maybe I’ll write a blog on that topic soon.  
 
I recently came across Mark Dotzour’s BLOG on A&M’s Real Estate Center’s website and found his post thought-provoking yet alarming.  He writes about how great it is that Fannie and Freddie are going to “greatly expand mortgage credit” and give “much needed protection to mortgage lenders” in the event that they make a home loan that becomes delinquent.  
 
Is this not what got us into this mess in the first place?  Of course, I love the idea of everyone owning their own piece of property.  But shouldn’t it be somewhat difficult to borrow such massive amounts of money?  
 
Anyway, here is Mark Dotzour’s blog post I am referring to:
 
 

Stop the Presses. There’s Good News Out of Washington

In my June 19 blog post, I mentioned that Fannie Mae and Freddie Mac had a new overseer (conservator), and he was talking about making it easier for Americans to buy a home. After years of super-conservative mortgage lending, Mel Watt told the world he was going to try to help more people buy a home in the United States.
I’m always skeptical about statements that come out of Washington, D.C. I learned a long time ago that just because someone in D.C. says something, it doesn’t mean that anything will come of it. But at the same time, I still remain naively hopeful that occasionally someone in Washington will actually do what they promise.
It appears that Mr. Watt might be just such a person.
In an Oct. 17 article, the Wall Street Journal reported that Fannie and Freddie and their regulators were close to an agreement to “greatly expand” mortgage credit and give some much needed protection to mortgage lenders.
The article reported it would be easier for lenders to offer mortgages with just a 3 percent down payment again. The new policies will be designed to ease lender fears of regulatory and legal punishment if they make a home loan that subsequently becomes delinquent.
This is a big deal.
The housing market is a vital component of the U.S. economy. We need to sell more homes, and we need to build more homes. Part of the reason new and existing home sales haven’t grown in 2014 as fast as expected is that it’s still too hard for qualified buyers to get a loan. Many people in the United States simply don’t have the funds for a 20 percent down payment.
If these changes are made, then it will open up the home purchase option to many Americans who currently can’t get a mortgage. Existing home sales will increase. New home sales will increase. New home construction will increase and create lots of new jobs.
Our economy could use a shot in the arm. A more robust housing market is about the most potent shot it could get.
 
 
Barrett Raven
barrettraven@gmail.com
C:  512-970-2648
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