homeownership

Federal Homeownership Policy: Money for Nothing

Earlier this week, the Los Angeles Times ran a column repeating the simplistic notion that since homeownership is “good” then subsidies for homeownership must therefore also be “good.” Never asked, or apparently even contemplated, is the question of whether all our various homeownership subsidies actually deliver homeownership. Let’s start with the ever popular mortgage interest deduction (MID).

Homeownership Before the New Deal

The latest canard offered for keeping taxpayers on the hook for mortgage risk is that, without such, homeownership would limited to the wealthy.  Sarah Rosen Wartell of the Center for American Progress stated before the House Subcommittee on Capital Markets, “The high cost, limited availability, and high volatility of pre-New Deal mortgage finance meant that homeownership was effectively limited to the wealthy.”  Congressman Al Green repeated the point.  As I’ve generally found Sarah to be one of the more rea

Race and Homeownership: Historical Trends

A common rationale for federal policies to expand homeownership is the desire to reduce observed racial differences in homeownership.  Receiving the most attention has been the gap in homeownership rates between white households and African-American.  The current homeownership rate for whites is 76.5%  (2007), while that for African-Americans is 54%, leaving a gap of 22.5%.

FHA’s New Stringent Standards

The Federal Housing Administration will reportedly announce more stringent lending requirements and higher borrowing fees. The move comes in response to growing concerns that rising losses on mortgages it insures will require a taxpayer bailout. Although any credit tightening is welcome, the agency will not propose an increase in the minimum downpayment, currently 3.5 percent.

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