Another Way Home

April 22, 1994

Mention the American Dream, and most families will envision a home of their own. This is a nation that values owning a home over renting. But until President Franklin Roosevelt's New Deal, home ownership was not much more than a pipe dream for most American families.

When government wants to make a difference in housing conditions and policies, it can. For example, through the Home Owners Loan Corporation, the Roosevelt administration put home ownership within reach of ordinary Americans by offering long-term, amortized mortgages for the full appraised value of a home. In its time, the HOLC lent out more money than the entire federal budget -- with no discrimination in its lending policies and without redlining older neighborhoods. When the program was phased out in 1952, it had earned a profit for the U.S. Treasury while making homeowners of substantial numbers of Americans.

Given the history of government influence in the housing market, it is no small thing when the Federal National Mortgage Association (known as Fannie Mae), the private financial institution chartered by Congress to encourage home ownership, announces a new initiative designed to help Americans buy a home. In a program unveiled this week, Baltimore is getting a significant boost with $750 million in mortgage financing over the next five years, $100 million more than has been available over the past five years.

Mayor Schmoke welcomed the initiative as "a shot in the arm" for city neighborhoods where houses are changing hands from older owners. Unless enough younger families are able to invest in these homes, neighborhoods that are currently stable could swiftly deteriorate.

But there is more to home ownership than passing the mortgage hurdles, formidable as they might be. Along with the pride of homeownership come a few headaches. Renters can call a landlord when the basement leaks or the furnace fails; homeowners have to shoulder the responsibility themselves. Those costs can easily stretch a household of moderate means beyond its financial limits.

Fannie Mae should be commended for including a pool of money for educating new homeowners. An initiative aimed at life-long renters should make every effort to make sure buyers understand the condition of the property they are buying and the maintenance it will entail. Those are the details that could prove the difference between successful home ownership and needless foreclosures.

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