Young families, military families and low-income people who may not make six digits but have good credit are, for all practical purposes, blocked from owning a home by requirements for high credit scores and down-payments.
It is a classic DC politician ploy: carry the water for a powerful lobby and call it centrism, while warning advocates of low and middle income people to "not let the perfect be the enemy of the good".
News coverage of the Senate's confirmation of Congressman Mel Watt on Tuesday to head the Federal Housing Finance Agency (FHFA) was all about politics, not the housing or banking issues he now has to address.
Wall Street doesn't want a new director of FHFA. They like things the way they are, and don't want a new sheriff in town. That is why Republicans are so willing to buck history and tradition, are so willing to stop the first African-American appointee to run FHFA to be confirmed.
Without the confidence that consumers can enter loan transactions without a substantially amount of risk, then both lender and consumer will become like two left footed dance partners caught in an awkward embrace.
The shutdown will likely affect some borrowers, but will have a minimal impact on housing in the short-term. The key for borrowers will be to ask your lender questions about necessary documentation and anticipated closing timeframes.
After months of robust home value appreciation, the U.S. housing market recovery is on very solid footing. We can now begin to turn away from housing's ugly recent history and start contemplating its future, specifically the future of housing finance.
The post-financial crisis reality is that the dream of owning a home has ended for too many Americans. Looking ahead, it is unfortunate that much of the same flawed thinking that led to the subprime mortgage crisis is now re-occurring.
President Obama has already fired Ed DeMarco, acting director of the Federal Housing Finance Agency (FHFA), but before he leaves DeMarco is handing an early Christmas present to his friends in the banking industry.