Policy proposals for dealing with our current depressed economy are largely at an impasse. Monetary policy has gone about as far as it can go, while fiscal policy is hamstrung by political constraints on any measures that enlarge the federal debt. Housing policy, in contrast, has enormous expansionary potential that can be released merely by revising or eliminating some of the many unproductive rules governing how home loans are granted.
These rules originate from Fannie Mae, Freddie Mac and in some cases from the Federal Housing Administration (FHA). In combination, these agencies touch about 95 percent of all home loans being written today. Most of the rules apply to who is and who isn't qualified to borrow, and among those qualified, to how much extra they