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Congress shouldn’t put homeownership out of reach
Op-ED
By C. Dan Joyner
The median price of a single-family home in South Carolina is more than $159,000, yet 70% of the population now owns their own home—a record high.
Affordable interest rates are to thank for this, as they’ve enabled families (especially those in lower income brackets) to cope with rising prices and realize their dreams of homeownership.
But now some in Congress are pressing for changes that could cause interest rates to climb and force many Americans out of the market.
These changes are directed at the government sponsored enterprises known as Fannie Mae and Freddie Mac, public/private partnerships that shoulder much of the responsibility for keeping mortgage rates down and making housing affordable.
Both Fannie and Freddie have had recent accounting problems that should be cause for concern and show we need greater regulatory oversight of these institutions. The U.S. House recently passed a bill that would provide the needed oversight, but a different bill pending in the U.S. Senate would take GSE oversight to a level dangerous for our economy.
Some members of Congress feel the GSEs have grown too large and need to be sharply restricted, if not completely eliminated. They want GSEs to get rid of entire portions of their financial portfolios.
Without these portfolios the GSEs would be unable to continue funding our housing market at the rates they have over the years. Most of the people in the real estate industry, professionals who know what it takes to help families find homes, think this would be a huge mistake.
In the 30 plus years they’ve been in existence, Fannie Mae and Freddie Mac have revolutionized the housing industry in this country.
They pioneered the American Mortgage (fixed-rate, long-term, pre-payable) that has become the standard financing instrument for today’s homebuyer.
They are the major advocate for the consumer in the home market and remain loyal to their mission of promoting affordable housing for everyone.
Freddie Mac alone helped fund housing for more than 20,000 low- to moderate-income families in South Carolina last year. They support programs such as a home ownership initiative in Spartanburg and a first-time homebuyer effort in Charleston. And they do it all without a single dime of taxpayer money.
If the GSEs are precluded from retaining mortgage portfolios (as their critics demand), their role in the marketplace would be assumed by an elite group of huge Wall Street banking corporations focused solely on making a profit and oblivious to the needs of the small borrower.
The affordable home financing that has helped our economy flourish would almost certainly be a thing of the past.
Think about what even a small increase in interest rates would mean for the average South Carolina homebuyer. If interest rates on a 30-year fixed mortgage went up 0.25% for the median home in our state, you would have to pay another $8,766 in interest.
Reasonable mortgage interest rates that put today’s high-priced homes within reach of the average family are a positive force in our economy, one that needs to be maintained.
Congress should work to fulfill the dream of homeownership for more Americans, not create obstacles that make it a financial impossibility for many.
Join me in letting Congress know we support the proven, effective GSE structure that exists today and don’t want to see it destroyed.
C. Dan Joyner is the president and CEO of the C. Dan Joyner Co., a commercial and residential real esate firm based in Greenville.
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