- The Washington Times - Wednesday, November 30, 2011

There is no question that our nation’s housing finance system needs a major overhaul, but following Steve Stanek’s harsh proposal to abolish Fannie Mae and Freddie Mac and replace them with nothing would prolong the current housing downturn even further and make it difficult for young people coming into the housing market to become homeowners (“Save housing, kill Fannie and Freddie,” Commentary, Nov. 23).

The federal government has played a central role in enabling working families to finance the purchase of a home since the era of the Great Depression. Using government backing to provide credit for home buying has worked to the financial benefit of the majority of Americans and has strengthened our society and economy. The government’s commitment to homeownership reflects the top priority of the American people to own homes of their own, and Mr. Stanek is sadly mistaken in viewing national policies in this area as an attempt to manipulate housing markets.

Whether they realize it or not, most of your readers would not have been able to afford to buy a home without a helping hand from the government in the credit markets. In the private marketplace to which Mr. Stanek would like to relegate prospective homebuyers, it now takes at least a 20 percent down payment, substantial amounts of money in the bank and a sterling credit history to obtain mortgage financing. To purchase a home in the $300,000-$400,000 range, which is roughly the cost of a first home in the Washington area, would require $60,000 to $80,000 upfront for the down payment from a private lender. That is a lot to expect from a young couple just starting out.

The reality is that most homebuyers are small fries in the free market, and as such, they are subject to financial tides that can turn strongly against housing when there is more money to be made elsewhere. Where there is political corruption and abuse in the housing system, it is incumbent upon those who rebuild the system to eradicate it.

The boom-and-bust period of roughly the past eight years has been an unfortunate aberration for housing, but we should not use it as an excuse to back away from supporting policies that enable ordinary, responsible people to further their horizons by owning a home.

BOB NIELSEN

Chairman, National Association of Home Builders

Washington