Hope Vs. Experience
I think that is what is on display at the Room for Debate discussion of housing finance reform. The hopers say that we need a housing policy, ignoring the experience. I say otherwise. Concerning Freddie Mac and Fannie Mae, I am the only one to argue for the following:
They should be forbidden from participating in the market for loans with low down payments. They also should be forbidden from participating in any loan other than for purchase of a home by people intending to live there. That means no loans for investment properties, no home equity loans, no second mortgages. I also think that it would be best to limit Freddie and Fannie to 30-year and 15-year fixed-rate products. All of these limitations should be put in place ASAP.