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  • Comment Detail

  • Date: 01/08/14
    First Name: Paul
    Last Name: Pongetti
    Organization: N/A
    City: N/A
    State: N/A
    Attachment: N/A
    Number: 2013-N-18

  • Comment

    January 8, 2014

    Federal Housing Finance Agency, Office of Policy Analysis and Research
    400 7th Street, SW, Ninth Floor
    Washington, DC 20024

    I request that you immediately reduce Fannie Mae and Freddie Mac conforming loan limits to $400,000, eliminate “High-Cost Area” loan limits, and tie any future loan limit increases to changes in middle class incomes rather than housing values. Lower conforming loan limits would lead to secure ownership of property that is in the interest of future homeowners, taxpayers, and a healthy and stable middle class.

    Recent Government housing policies have been a disaster for the middle class. Over the last 15 years, middle class incomes remained stagnant, debt levels increased, and home prices rise and fall with the whims of Wall Street banks and central planners in Washington. It’s no longer realistic to call United States housing a true “market”. Where I live in Orange County, CA, home prices have entered a new mania stage due to reckless lending policies and “High-Cost Area” conforming loan limits. Affordability has declined to approximately 20%, the same level that was measured in 2008 before the last real estate bust.

    I ask that you resist the higher conforming loan limits desired by banking and real estate lobbies as these policies are designed to manipulate the cost of housing even higher. Over the past 15 years, the affordable housing schemes promoted by these interest groups have relied on increasing government transfers and increasing levels of home buyer debt. Rather than continuing these failed policies that resulted in rich banks and home buyers hopelessly burdened by debt, I ask that you reduce conforming loan limits, and return to the pre-1990s standards of 28% debt to income limits and 20% down payments that allowed previous generations to achieve secure ownership of property. Relative to their incomes, previous generations of home buyers paid lower prices for housing and had much more discretionary income during their working years. There is a societal cost to high debt levels. If debt levels continue to increase for the young, and more of their incomes are directed to debt service, other sectors of our economy will deteriorate and our society will become less stable. Excessive housing debt levels force home buyers to neglect retirement and college savings. Today, when jobs and incomes are less secure, Social Security and pensions are less secure, and two or more incomes are needed to qualify for a mortgage, it’s reckless to allow home buyers to borrow any more than allowed by pre-1990s lending standards.

    Instead of manipulating the cost of housing higher with reckless lending standards and taxpayer guarantees, Government polices should allow home prices to return to a sustainable and affordable level. Truly affordable housing is only possible through lower prices based on actual borrower incomes, not excessive financing.

    Lower home prices = Secure ownership of property = Stable middle class.

    Lower conforming loan limits would allow the economy to grow on a stable and real foundation. Please reject the cronyism of banking and real estate lobbies that have enabled the boom and bust housing market. Please support lower conforming loan limits and secure ownership of property for the middle class, the bedrock of the American Dream.

    Sincerely,
    Paul Pongetti
    Orange, CA