While that is true about those who can't afford a house shouldn't buy one, you are missing the point that fmna /fmcc were Not created so poor people old buy houses. They created increased liquidity for banks to lend money out. You are dead wrong if you think private money can absorb a 3 trillion and growing mortgage market and keep rates competitive. Your average of 70.00 is an extremely conservative estimate and doesn't take into account a growing down payment demand. Plus that's average, which means that there are those that will pay well over 100.00 more a month in your scenario and with increased taxes and interest rates it can turn out to be a much larger nut to crack and people may just say they don't want to buy be aude it's not worth it. You don't want a housing market where almost half the people rent. It would be a horror show.
Perhaps they should rent in Potter's field. Fannie mae was formed in 1938 after something called the great depression. Everything went fine until 2002 when phony interest rate hedging scandals caused the gse's to lose market share to wall street. It was wall street that brought us sub-prime loans etc. Now Corker is proposing we let the fox back to guard the chickens because he managed to divert the dog's attention one time. If one wants to learn what really happened in 2006-2009 watch Cnbc 's documentary of 2009 called House of Cards(not current hbo-which is also good). Another way to find out would be to look at the majority report of the Financial Crisis Commission which gave the gse's a minimal role and assigned most of the blame to Wall Street. The $70 figure is in dispute. Congressman Capuano searched the Hsbc web site for England. The longest term on a mortgage was 7 years and the minimum down payment was 40%. The Republicans want to take us back to 1929 or 2005 and we know how those movies turn out. Please rent the excellent movie "It's a Wonderful Life" or another great film "Mr Smith goes to Washington".
That's going back to what i mentioned earlier. You get a mortgage based on your income. That solves the whole issue. So Joe schmo sits down at the bank and gets rejected on his 250 000 dollar mortgage because he makes 20k a year. It is wrong and irresponsible for someone to lend a person that kind of money because he made his cell phone payments and his credit card with a 500 dollar limit on time. That puts people into debt slavery and leaves nothing left over. Boom hot water tank goes innate house 2000 dollar bill, that person is now officially toast. Its not right based on credit to expect people to walk such a fine financial line every month for 20-25 years.
If all they can afford is a 1 bedroom condo for 70 000 then that's it. That's the way it works you can't spend money you don't make. Best off reinvesting in themselves to increase their income for the bigger house they want.
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