The U.S. Senate should move quickly to confirm Mel Watt as the new head of the Federal Housing Finance Agency (FHFA), but not for any of the political or procedural reasons usually discussed. A quick confirmation is required because we need new leadership on U.S. housing policy — a policy that on some crucial points is headed in the wrong direction for the wrong reasons.
The Great Debate
We shouldn’t have to sue to get Fannie Mae and Freddie Mac to follow their congressional mandate and put some of the billions they are generating into affordable housing for the millions of families who need it. But that’s what is has come to for housing advocates, who are frustrated that the Federal Housing Finance Agency (FHFA) is still refusing to fund the National Housing Trust Fund.
It has been nearly six years since U.S. home prices peaked and then plunged, and still the nation’s mortgage markets remain mired in slump. Despite occasional signs of improvement in some localities, the S&P Case Shiller Index shows home prices down 9 percent from their previous post-bubble high – itself very low in relation to trend. Meanwhile a backlog of some 400,000 homes awaited liquidation at the end of 2011, and an additional 2.86 million mortgages were 12 or more months delinquent. That’s a “shadow inventory” of 3.25 million homes already foreclosed or now facing foreclosure – an inventory that weighs on home prices, families and neighborhoods alike.
Last week, I spotlighted three ominous trends in consumer banking. The last one spotlighted a brewing war “between the private bank sector and the government over who exactly controls the allocation of consumer credit in this country.”
By Julian Fisher
Bank of America shares have been rocked by news that a consortium of mortgage bond investors is demanding it repurchase billions in soured mortgages, amplifying the effects of the recent “robo-signing” debacle.
-James Saft is a Reuters columnist. The opinions expressed are his own–
As we say goodbye to a decade so abysmal it never even earned a nickname, it is time to take bets on how the coming 10 years will shape up in economics and financial markets.
Things in the U.S. economy are moving in the right direction, but the pace will be slow, frustrating and very likely to disappoint investors betting on a rip roaring old-fashioned recovery.