Realty Times October 5, 2000

New Alliance Confronts FM Watch, Champions Existing Housing Finance System
by Broderick Perkins

Alexandria, VA-- A convergence of conditions that could undermine the foundation of the American Dream has spawned another Web-based educational effort dedicated to shoring up the nation's housing finance system.

On the heels of the U.S. Department of Housing and Urban Development's vow to boost home ownership to 70 percent this decade, the new HomeownershipAlliance.com says its national coalition of home builders, community bankers, community developers, civil rights groups, real estate brokers and secondary mortgage market leaders will help make it so.

Last week's emergence of the new group also makes it ever more difficult for consumers to determine who really is on their side.

Borne of what it says are threats to the nation's housing market, the alliance vows to repel any such efforts.

"Some critics of the system are implicitly calling for policy makers to reconstruct the system so it can be more like that of other industrialized countries. Forty-percent down-payments, like they have in Germany, and huge prepayment penalties that are the norm for refinancing in some European countries are things we did away with decades ago, and we certainly don't want to turn the clock back," said Rick Davis, alliance president and former presidential campaign manager for Arizona Sen. John McCain.

The limited-liability corporation funded by its membership, includes Fannie Mae, Freddie Mac, National Association of Home Builders, National Urban League, National Bankers Association, and the National Association of Real Estate Brokers National Association of REal Estate Brokers and others among its founding members.

Will the real consumer advocate please stand up?

It says threats to the existing housing finance system include:

  • FM Watch The new alliance was largely formed to counter howls from the also Web-based FM Watch, a self-appointed Fannie Mae and Freddie Mac watchdog group. Largely comprised of major prime and sub-prime mortgage lenders and the private mortgage insurance industry, the group supports bills before Congress that would sharply curtail the activities of Fannie and Freddie, or remove their government backing. FM Watch says Fannie and Freddie have over stepped their federal charters and it monitors the secondary mortgage market financiers to ferret out an actions that could benefit investors at the expense of home buyers and taxpayers.

    The Homeownership Alliance says FM Watch is comprised largely of Fannie Mae's and Freddie Mac's private-sector competitors who want to undermine the competition.

    "Until all Americans enjoy decent and affordable housing, as well as the opportunity for home ownership, the critical support provided by the GSEs to the housing finance system should not be weakened," the alliance says.

  • Regulations Tightening regulations aimed at protecting borrowers from predatory sub-prime lenders may overshoot the mark and cut the greater flow of good sub-prime housing loans for those who might not otherwise be able to afford shelter.

    "Affordable mortgage credit is the lifeblood of America's housing system," the alliance says.

  • Reduced Tax Benefits Quoting Abraham Lincoln "The strength of a nation lies in the homes of its people," the alliance says while some critics admit housing affordability would suffer under initiatives to reduce or eliminate the mortgage interest deduction, the low-income housing tax credit and other tax benefits attached to housing, those same critics suggest the tax incentives have begun to shift capital away from other wanting resources.

    The alliance vows to see to it that the current tax benefits systems remain intact.

    Information technology spearheads alliance's effort

    Using the Internet as its launching pad and education as its goal, the alliance will attempt to beat back threats to the housing finance system by focusing on three key activities:

  • HomeownershipAlliance.Com The alliance's Web site will act as a clearing house of housing information via links to all member organizations' Web sites. Consumers and others can sign up for a free push of e-mailed newsletters and read guest essays supporting housing from the likes of previous HUD secretaries Henry Cisneros and Jack Kemp. Consumers can also compare the U.S. housing finance systems with those of other major nations.

  • Research The alliance plans self-funded housing finance research useful to consumers, advocates, academics and alliance members.

  • Seminars Later this year, the alliance will begin sponsoring an annual seminar to promote home ownership, discuss recent trends and outline threats and potential threats to the system.

    "We have come together in an extraordinarily broad coalition for one purpose: to stand up and be counted on the side of America's housing finance and delivery system," said Robert L. Mitchell, president of the National Association of Home Builders.


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