Since the real estate bubble burst a few years ago, there has been much said about home ownership and its importance to our economy and our citizenry. The concept of home ownership traces its roots back for generations and has become the fabric of the American Dream. That “dream” was certainly tarnished in this decade given the predatory lending tactics of unscrupulous loan brokers and lenders, which sealed the fate of millions of homeowners not properly qualified for their mortgage product. As a result of those loose underwriting standards, real estate prices became inflated and the sector melted down to a previously unimaginable rate.
We, of course, as a Nation try to learn from our mistakes as we cannot migrate back to the easy underwriting standards of the past, nor do we want to overcorrect and make credit unavailable to qualified buyers. What may even be worse is the sheer volume of regulations created as a result of the housing crisis that make, a once simple application process, very complicated. Add into the mix the trouble at Fannie Mae and Freddie Mac and the potential to restrict lending only to those qualified buyers with 20% down and you have a real attack on homeownership in America.
As if this isn’t enough, discussion has begun again in Washington about eliminating the mortgage interest deduction as one way to try and close our budget gap. This deduction has been a long cherished incentive for homeowner investment and if implemented could have the same chilling effect on home sales that the fiscal cliff had on Holiday retail sales this season.
Why does this matter? It’s pretty simple when you understand that 18% to 20% of our GNP is tied to housing-related services in some form, meaning nearly 20% of the American economy is tied to the housing market. It’s probably a similar percentage here in Fairfield County. As Washington gets back to work in 2013, we need to be certain our legislative leaders look for ways to preserve the housing market and not make this sector’s problems even worse than they are today.
As a mutual community bank, First County Bank takes its role in providing opportunities for home ownership very seriously and we are proud of the fact that we do business in a responsible way. Helping lower Fairfield County residents buy their first home; refinance a mortgage at a lower rate; or in some cases, remain in their home is a key priority for our team of mortgage specialists. We are committed to working with each borrower in a highly personalized way as home ownership is important to the future success of our towns, our cities and the country. Working with local nonprofit leaders such as Housing Development Fund (HDF), First County Bank has played a role in providing funding and programs for countless first-time borrowers and we are thrilled to hear the stories of how owning a home can make such a positive difference in a person’s life.
But we also understand that homeownership may not be for everyone. And, while we don’t want to negate homeownership and become a nation of renters, we need to be careful not to over-correct for the “sins of the past.”