Could Zero Down Mortgages Encourage Good Behavior?

Sound policy needing but a stable reality.

Let my beloved come to his garden
And eat its pleasant fruits.
—Song of Solomon

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Sound institutional policy encouraging home ownership no doubt is sane policy when a house is treated a home — a launching point from which one lives what hopefully becomes a productive life. Thus, the spirit of policy discussed in the following piece truly is desirable...




Everyone does a fine job arguing their position on Fannie Mae's zero down mortgage program. Yet given current economic circumstances you really have to respect the naysayers here. Without a stable economy — absent a sound credit system facilitating its functioning — the risk of mortgages going underwater will remain elevated no matter what due diligence was taken prior to issuing these loans. Likewise, the risk a program like Fannie Mae's once again is abused also looms, particularly given the U.S. economy's true, moribund state. The masking of our physical economy's collapse by building another real estate bubble becomes tempting political policy, and we are all too aware where this will lead. Yet if as a result of a new, national policy reestablishing the American System of Political Economy we were put on such sound footing as facilitates abundant, capital intensive investment in state-of-the art industry, then a zero down program like Fannie Mae's made available to first-time home buyers likely would find millions of young Americans who, indeed, turn out to be excellent credit risks.

—Tom Chechatka