Housing Market Needs A New Deal

When America has been in an economic crisis or wanted to open access to greater home ownership and educational opportunities, the government has responded with quasi-governmental entities like Fannie Mae and Fredie Mac and Sallie Mae, government entities that while making a profit, aid the American consumer.

The current foreclosure environment has created a crisis that has yet to run its course, affecting numerous consumer parties, including both the indebted homeowner and his/her neighbor, whose home equity and overall community value is at risk as well. As opposed to (or in addition to) providing Americans with money to go out and spend, as the Bush policy proposes, the next President should consider proposing the creation of an entity that would buy foreclosed property in the distressed communities across the country. This agency would sell the property to first time home buyers and the working poor at market or, under some circumstances, near market rate. Importantly for all involved, including those already owning homes in the area, the prices in the community would be stabilized and the America dream would still be attainable for many. In addition, local county zoning boards would limit building permits for new home construction until the inventory has been absorbed.

A public private partnership between HUD, Fannie Mae and the new entity would greatly assist in a much needed housing market recovery.