4 of Every 5 Americans could be Owners:

It's Easier than ever for families to obtain financing.

Most observers agree that 100% ownership is not attainable, if only because some people will always prefer to rent, Fannie Mae Vice Chairman Jamie Gorelick raised the bar considerably, saying that 75-80% can now safely be considered a "natural resting place" for the ownership rate. That's far above the current ownership rate of almost 68%. It's even more than the 70% that former Fannie Mae Chairman James Johnson suggested was the saturation point a decade ago. But Gorelick, noting that it's now easier than ever for families who want to own to obtain financing, said she's "very optimistic" that the nation's ownership rate will be "north of 71%" by the end of the decade. And it may not stop, she said, until it hits 80%. "We're changed the definition of readiness," she explained, referring not only to the shift away from traditional underwriting guidelines and hefty down payment requirements but also to the new-found national resolve to raise the ownership bar." As a society, we're made a big bet on housing, and I don't that policy will ever change because it's been so good for the fabric of our national life," the Fannie Mae official said. Gorelick made her remarks during an opening morning session at a mortgage conference in Chicago. The session was billed as "a conversation with the four tenors of housing finance." The discussion was moderated by former FHA Commissioner Nicolas Retsinas, who is now director of the Joint Center for Housing Studies at Harvard University, and included Paul Peterson of Freddic Mac, Ginnie Mae President Ronald Rosenfeld, and Alex Pollock, president of the Federal Home Loan Bank of Chicago. All the speakers represented government sponsored organizations designed to keep the money flowing so lenders will always have an endless of funds for housing. Gorelick indicated that she expects the ownership rate to start climbing higher in the near future.

"Now that we're coming off a refinancing boom," she said, "lenders can begin focusing on serving the markets they tended to forget or dismiss" when they had all the business they could handle. "We're on a wonderful trajectory that has tremendous possibilities for our country," she said, adding that the desire for ownership is driven not only by "a real nesting instinct" but also the fact that the "real wealth" of most households rests in their homes, not the stock market. Other panelists tended to agree with Gorelick's assessment, saying that even an economic downturn wouldn't pop the housing bubble. Ginnie Mae's Rosenfeld was one who's not particularly concerned about the recent increase in delinquency rates, even though so many of todays home buyer's are highly leveraged. "It's not a matter of great concern," he said. "These are fundamentally good people who are experiencing short-term bumps in the road. We might have to recycle some houses, but at the end of the day, we believe we're on the right track." In the overall scheme of the things, the new Ginnie Mae president added, rising default rates are "not significant." People who are marginal credits today will one day be seen as very good credits. "Peterson, who is executive vice president for single-family business at Freddie Mac, said "there's a lot of opportunity for housing to remain robust." While housing prices will "from time to time" become out of line in a handful of places, he said, the market overall will remain "very steady." The Freddie Mac executive also pointed out that even if the economy remains healthy, delinquencies would rise, as they always do, as the loans become seasoned. Traditionally, the percentage of defaults rises for the first few years before peaking in the fourth or fifth year as people who were financially sound when they applied for funding experience major illness, unemployment and divorce." The only thing that would prevent (the inevitable run up in delinquencies) would be another couple of successive waves of refinancing," he said. "But even with that, it will only delay it again."

Source: Homestore.com