In an interview in Forbes, Nicolas P. Retsinas, former Federal Housing Commissioner and Director Emeritus of Harvard University’s Joint Center for Housing Studies, says the housing recovery is being spurred by new household formation, which in turn has been sparked by the improving job market, and abnormally low interest rates. He says while the administration is trying to accelerate the housing recovery, the government-sponsored enterprises (Fannie Mae and Freddie Mac) which insure, securitize, and guarantee 95 percent of all mortgage loans, are narrowing the credit tunnel because they do not want to lose money and be on the front page asking for a bail-out. Noting we over-encouraged homeownership, which in part led to the housing downturn, he says the mortgage interest deduction (MID) has become a sacred cow, but perhaps it is time to allow first-time homebuyers and those below a certain income only to use it, as it deprives the government of $100 billion annually. MHProNews has learned in a book Retsinas wrote, he says nearly all cultures have in their psyche the notion of homeownership, including two-thirds of American families. He says when the current demand for rentals subsides, the equilibrium will shift and homeownership will likely rise.
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