For the record, I'm in favor of preferred mortgage rates for those who pay 20 percent down on a house. [UPDATE: You can hardly qualify for a loan at any rate nowadays without 20 percent down.] It might sound illiberal of me, but during the Bush years too many darn people bought houses they couldn't afford, or speculated in housing as a leveraged investment, and that's partly why we're in this mess now.
And I'm in favor of proposed regulations that would require banks to hold on to 5 percent of the risk associated with bundled mortgagees, or mortgage-backed securities. Banks have to keep some skin in the game.
If buyers can't put down 20 percent, or their monthly mortgage payment is more than 1/3 their net monthly income, then they should buy a cheaper house, or rent. That is the old rule of thumb that was thrown out the window, to our detriment.
Politicians should not save the banks and bondholders (again) by propping up the housing market (again); we need time to let existing houses go down in price and clear the market. 13 percent of U.S. housing stock is currently sitting vacant. We need those thousands of McMansions to be sold at McDonald's prices!
By Janell Ross
June 2, 2011 | Huffington Post
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