Government Involvement in Secondary Mortgage Market

The article:
http://www.multihousingnews.com/multihousing/content_display/industry-news/e3i140609747acf4889d8c4a8002c8cd808

Summary:
This article from Multi-Housing News states the National Association of Realtors (NAR) recommended that government should continue to involve in the secondary mortgage market in order to insure there is sufficient capital to support mortgage lending to qualified borrowers. As there are more and more housing issues, NAR developed the principles for consideration which “call on the government to ensure an active secondary mortgage market; support affordable mortgage rates for qualified borrowers; require that institutions pass on the advantages of lower borrowing costs by making lower rates on mortgages available for qualified borrowers,” and so on. With these being said, someone brings up that safe and affordable mortgage must be available throughout the nation to make a balance; which would lead to the requirement of higher loan limits passed in the economic stimulus bill earlier must be permanent. Government must keep in mind that sufficient capitals are needed to support mortgage lending in all types of markets.

Connections:
The connection to Chapter 3 of Economics is the role of government in a market economy. As mentioned in the article, government’s involvement in the secondary mortgage is necessary. It not only keeps the secondary mortgage market in active, but also gives more options to qualified borrowers. In this case, it’s like a positive mannered third party effect. Because in the market, there is not enough demand for housing, it results in a surplus of houses. As the government in between buyers and seller gives a hand, like support affordable mortgage rates and so on. It’s easier for borrowers to decide whether or not to buy a house in these days. Also, it’s easier for buyer and seller to reach a deal with lower mortgage rates and hopefully reduce the surplus of houses.

Reflection:
I agree with McMillan saying “The federal government must also insure that there is sufficient capital to support mortgage lending in all types of markets.” As this recession affects all aspects and all around the world, I believe not only housing needs government to fund, but also other types of markets. The federal government must have a better plan where their money should go and insure there is sufficient capital to support other potential problems. With this being said, I think housing in United State is really a big problem. It affects lumber industry in Canada. Because there is not enough demand for housing, numbers of new houses decrease. As a result, the demands for lumber decrease as well.