1/3 of the American household do not own real estate. Solutions do decrease that number?
A major problem in USA, an exceptionally wealthy and global financial super-power is that, historically, 35% of the population cannot qualify to obtain a Home mortgage loan under the current regulations, institutional and qualification constraints. This, many economists argue, lead to an unequal wealth distribution as homes are the major source of enhancing wealth; Also, these households cannot take advantage of home mortgage-interest tax deduction, which is the number one tax deduction. Many Public policy action is focused on improving the wealth of the poorer segment of the population, and to enhance home affordability. Enabling poor people to purchase and own a home and participate in the American Dream and Wealth creation has become a major goal for the Government. One approach that was tried and failed was the relaxation of underwriting standards in 2000‘s, and Securitization of these loans which lead to Subprime securitization and the great recession in 2008 and near economic collapse of global economy. Various other approaches have been proposed such as to provide substantial cash assistance (of $25, 000) to individuals whose annual income is less than $100,000 to use as a down payment to help to buy a home. Alternatively building some sort of subsidized housing for the poor people by giving them free land.
Would you support these approaches? If so, what are the potential challenges of this approach for financial institutions and mortgage markets? If you do not support that approach, what steps would you recommend to enhance higher participation of home ownership, and minimize wealth inequality in the USA in the forthcoming years?
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