A retreat in government programs and support for homeownership may be imminent according to an article published in the Washington Post on July 21, 2010.
The administration’s narrower view of who should own a home and what the government should to do to support them could have major implications for the economy as well as borrowers. Broadly, the administration may wind down some government backing for home loans, but increase the focus on affordable rentals.
The shift in approach could mean higher down payments and interest rates on loans, more barriers to lower-income people buying houses, and fewer homeowners overall, government officials said. But it could also pave the way for a more stable housing market, one with fewer taxpayer dollars on the line and less of a risk that homeowners will not be able to pay their mortgages. And it could spell changes throughout the financial markets, as investors choose new places to put their money if the government withdraws some incentives for investing in the U.S. mortgage market.
The policy shifts described in the story are likely to be realized in a housing finance reform bill expected to make its way through Congress late this year or early next. The federal government has long encouraged and supported homeownership, perhaps (some would argue) to the point that these policies caused the housing crisis the nation is currently weathering.
There are other subtle signs that the Obama administration may be less enthusiastic about homeownership than its predecessors. For example, members of his administration have proposed scaling back or eliminating the mortgage interest deduction, and for the past two years the administration hasn’t formally recognized national homeownership month.