The KISS Approach

The biggest problem with government is it complicates everything. Everything should be done using the KISS approach. Another idea to fix the mortgage issue is to use what is already in place, the FHA program:

Congress created the Federal Housing Administration (FHA) in 1934. The FHA became a part of the Department of Housing and Urban Development’s (HUD) Office of Housing in 1965.

When the FHA was created, the housing industry was flat on its back:

Two million construction workers had lost their jobs.

Terms were difficult to meet for homebuyers seeking mortgages.

Mortgage loan terms were limited to 50 percent of the property’s market value, with a repayment schedule spread over three to five years and ending with a balloon payment.

America was primarily a nation of renters. Only four in 10 households owned homes.

During the 1940s, FHA programs helped finance military housing and homes for returning veterans and their families after the war.

In the 1950s, 1960s and 1970s, the FHA helped to spark the production of millions of units of privately-owned apartments for elderly, handicapped and lower income Americans. When soaring inflation and energy costs threatened the survival of thousands of private apartment buildings in the 1970s, FHA’s emergency financing kept cash-strapped properties afloat.

 

The FHA moved in to steady falling home prices and made it possible for potential homebuyers to get the financing they needed when recession prompted private mortgage insurers to pull out of oil producing states in the 1980s.

 

That is an excerpt from the HUD website on the FHA program. Use what is there with simple modifications: fixed interest rate (4%), reduced refinancing costs, available to everyone.

 

This would make things simple, cost less, and would treat everyone equally.