Our quality of life continues to attract businesses and people to our region. With this influx of homebuyers, the housing market in Boise shows no sign of slowing. And finding an affordable rental in the Treasure Valley, let alone one for a low-income family, has become nearly impossible.
And so Idaho joins more crowded parts of the country facing limited housing stock and rising prices that hit middle class families particularly hard.
While we are better off than a few years ago, when many Idahoans faced falling prices on homes they’d invested everything in, we still lack a robust, private investment vehicle for affordable housing. And, Idaho should be leading the charge for reform to resolve the situation surrounding Fannie Mae and Freddie Mac, the primary backers of affordable home loans and rental-housing financing.
Some readers will cringe, remembering when the innocent-sounding Fannie and Freddie were at the center of the 2008 financial crisis, when government guarantees on sketchy loans and aggressive investment practices led to real problems — and a $187 billion taxpayer-funded bailout.
That’s exactly why reform is so important.
For nine years, these two enterprises have survived under government conservatorship. And while that brings safer decision-making, taxpayers could be hit up any day for another cash infusion. To protect taxpayers, we must move toward a functioning private market and away from a government-sanctioned monopoly.
Fortunately, a plan put out by the Mortgage Bankers Association provides a road map to a viable future market. First, clarify the government’s role. There is a case for the government as the guarantor of securities backed by mortgages for low- and moderate-income Americans, to make them attractive to private investors through all economic cycles. But there is no reason for the government to backstop corporate debt and protect shareholders.
We need to protect taxpayers, who should never again be asked to ante up billions.
Next, open up the mortgage-backed security market to competition. A lack of competition breeds stagnation and concentrates risk, while a healthy market helps drive improvements in service, technology and product innovation.
Finally, ensure that private investors pay their own way. The market will eventually experience another downturn and the system should put private capital at risk ahead of American taxpayers.
The resulting investment option — a single, reliable, dividend-paying security — will attract capital into affordable housing in a way no government-funded program ever could.
While this doesn’t solve all of Idaho’s housing challenges, it transitions the mortgage-support market, making it more diverse, competitive, stable and helps support the American dream of home ownership.
That alone is enough to recommend quick and decisive action. Hopefully our elected leaders in Congress will see it that way, too.
Alison Gillespie is president of Idaho Mortgage Lenders Association.