Thursday, June 9, 2011

The Politics of Housing Is Salient

. Thursday, June 9, 2011

Another anecdote:

An unprecedented alliance of organizations from the real estate industry, new home builders, mortgage companies, banks, civil rights groups and other lobbyists have descended on Washington, D.C. lawmakers to push against legislation that would require 20% down payments for a mortgage.

The Qualified Residential Mortgage “QRM” proposal would limit the number of home buyers qualified to make a purchase, require higher credit scores and send mortgage underwriting back more than 30 years. Members of Congress are struggling to reach a balance to provide new regulations for home mortgages, implement financial reform legislation and provide realistic reforms on home mortgages. ...

“The Qualified Residential Mortgage (QRM) will define who will and who will not get the most affordable mortgage products, potentially prohibiting a significant segment of qualified borrowers from being able to achieve homeownership,” said Mortgage Bankers CEO David H. Stevens. “Allowing more time for comment will enable us to prepare a more thoughtful and comprehensive analysis and response.” ...

Groups from both major political parties wrote to the six federal agencies last week implementing mortgage changes, which are the SEC, FDIC, HUD, the Office of the Comptroller of the Currency, the Federal housing Finance Agency and the Federal Reserve to urge them to focus of “sound underwriting, safe loans,” mortgage borrowers’ ability to repay loans and fully documented loans, and not to require larger down payments as they work on regulations to improve the mortgage finance system.

When major elements of both political parties line up with citizens' groups, finance, and a major industry (construction) on the same side of a policy, is it any wonder that policy gets pushed in that direction? This was what I was driving at in my previous posts on housing politics and the blame game.

Via Arnold Kling, who says that part of this is wrong: this is anything but "unprecedented"; it's been the same political dynamic for the past 20 years (some of which Kling observed directly, working at the Fed and Freddie Mac).


The Politics of Housing Is Salient
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