On the recordJune 10, 2010
At best, we have a fragile recovery from a massive recession caused by a precipitous decline in home prices. Now, I know the gentleman is well-intentioned, but nothing is more likely to cause a double dip in this recession than the second precipitous drop in home prices that would be caused by pulling FHA and, as the gentleman argues, Fannie and Freddie out of the home lending market. Right now, FHA is 30 percent of the home purchase finance market, about over half of that market for African Americans, 45 percent for Hispanics. Are we going to tell one-third of American home buyers, almost half or over half Hispanics and African Americans seeking to buy homes, that they are not going to be able to buy those homes? Because, if they can't get FHA financing, the private sector may be there, but at much higher rates. And there is no way that these individuals will be able to afford to buy those homes. With fewer buyers, you will see a precipitous decline in prices. That devastates communities further, devastates the American economy further. FHA is actuarially sound. It charges fees for the services and the guarantees that it provides. And to cut its role in the market by a third as part of an overall policy designed to take FHA, Fannie Mae, and Freddie Mac out of the market ignores the fact that, in these troubled times, those three entities--FHA, Fannie, and Freddie--account for almost all of the home mortgages obtained by middle-class and working families.
