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1hank you for lnvlLlng me Lo [oln you for Lhls lmporLanL dlscusslon and, ln parLlcular, Lo offer perspecLlves on Lhe
paper recenLly released by ur. !oseph Cyourko LlLled 8eLhlnklng Lhe lPA." Clven Lhe lederal Pouslng
AdmlnlsLraLlon's, or lPA's, long and slgnlflcanL role ln Lhe u.S. home morLgage markeL, lLs recenL flnanclal
challenges, and Lhe conLlnulng sLruggllng condlLlon of Lhe houslng flnance sysLem, reachlng consensus on Lhe
approprlaLe role for lPA as parL of an overall resLrucLurlng of our home loan markeL ls essenLlal.
My general response Lo Lhe paper can be summarlzed ln flve polnLs LhaL l wlll summarlze flrsL and Lhen dlscuss ln
more deLall. 1hose flve observaLlons are:
1. lPA by many measures has been an excepLlonal success.
2. lPA has flnanclal challenges, buL Lhe sky ls noL falllng.
3. lPA's flnanclal challenges are noL due Lo lLs governmenL sLaLus" per se.
4. lmprovemenLs ln lPA's managemenL could enhance lLs flnanclal well-belng.
3. A federally subsldlzed savlngs program for moderaLe-lncome famllles ls an excepLlonal ldea.
1. FHA by many measures has been an exceptional success
1he flrsL senLence of Cyourko's paper reads: 1he lederal Pouslng AdmlnlsLraLlon (lPA) has falled by any
reasonable meLrlc." 1hls sLaLemenL ls belled by Lhe facLs. lounded ln 1934 wlLh Lhe goal of keeplng credlL
avallable durlng crlses, Lhe lPA has-ln Lhe 80 years slnce lLs foundlng-lnsured 40 mllllon morLgages. 1hls has
glven mllllons of Amerlcan famllles an opporLunlLy Lo bulld wealLh Lhough susLalnable and safe morLgage
producLs. And over all of Lhese years, lL has never cosL Laxpayers a slngle dollar.
8efore Lhe CreaL uepresslon, mosL morLgages were shorL-Lerm-Lyplcally only 3 Lo 10 years-lnLeresL-only loans
LhaL had Lo be repeaLedly reflnanced. lPA lnlLlally popularlzed Lhe fully amorLlzlng morLgage and over Llme
popularlzed Lhe 30-year, flxed-raLe, low-down-paymenL producL. 1hese producLs drove Lhe lncrease ln
homeownershlp LhaL was a hallmark of Lhe Amerlcan uream and wealLh creaLlon for Lhe Amerlcan publlc
LhroughouL Lhe remalnder of Lhe 20Lh cenLury. lurLher, lPA has rellably served populaLlons LhaL Lhe malnsLream
morLgage markeL underserves, wheLher Lhese markeLs are rural areas, reglons sufferlng economlc downLurns,
people of color, or low-wealLh borrowers.
lPA's essenLlal role Lo Lhe u.S. houslng flnance markeL ls noL only of hlsLorlc slgnlflcance. 1he lPA has and
conLlnues Lo play a key counLercycllcal role. Whlle prlvaLe morLgage lnsurers elLher wenL bankrupL or dramaLlcally
scaled back Lhelr lendlng durlng our houslng crlsls, lPA was, due Lo lLs governmenLal sLaLus, able Lo ramp up lLs
role ln Lhe markeL. lPA lenL heavlly lnLo Lhe markeLs LhaL suffered Lhe largesL decrease ln home prlces durlng Lhe
busL. ln facL, lLs markeL share rose from roughly 3 percenL Lo more Lhan 30 percenL. lor home purchase loans, Lhe
lPA's markeL share shoL as hlgh as nearly 40 percenL.
WlLhouL lPA's counLercycllcal role, Lhe recesslon would have been even more devasLaLlng. Accordlng Lo Lhe besL
esLlmaLe LhaL we have (from Moody's AnalyLlcs), lf lPA had sLopped lnsurlng morLgages ln CcLober 2010, by Lhe
end of 2011 house prlces would have fallen an addlLlonal 23 percenL, new home consLrucLlon would have fallen
60 percenL, and home sales would have fallen anoLher 40 percenL. WhaL's more, we would have losL anoLher 3
mllllon [obs, Lhe unemploymenL raLe would have been 12 percenL, and Lhe economy would have conLracLed
anoLher 2 percenL.
uurlng Lhe crlsls, lPA has also supporLed home purchases, especlally by servlng flrsL-Llme homebuyers and
borrowers of color. Whlle lannle Mae and lreddle Mac have devoLed much of Lhelr acLlvlLy Lo reflnances-72
percenL of Lhelr orlglnaLlons ln 2012 were for reflnances-lPA has conLlnued Lo supporL home purchase loans-
62 percenL of lPA orlglnaLlons ln 2012 served Lhls purpose. Cver Lhree-quarLers of lPA endorsemenLs ln 2012
supporLed flrsL-Llme homebuyers. And lPA lnsurance supporLed half of home purchase loans made Lo Afrlcan
Amerlcan and LaLlno households ln 2012.
As a resulL, Lhe paper's asserLlon LhaL lPA has falled by any reasonable meLrlc" ls a confuslng observaLlon LhaL ls
aL odds wlLh reallLy.
lf lPA cannoL serve Lhe markeL, we wlll lose noL only a cruclal counLercycllcal sLablllzer buL also a key drlver ln Lhe
avallablllLy of morLgage credlL. And Lhe markeL wlll llkely severely underserve Lhe very borrowers who are Lhe
fuLure of homeownershlp ln Amerlca: lower-wealLh and borrowers of color homebuyers.
2. FHA has financial challenges, but the sky is not falling
Cyourko's paper ls only Lhe laLesL ln a serles LhaL has warned LhaL lPA ls essenLlally bankrupL, spuLLerlng on lLs
lasL leg, and ready Lo collapse aL any momenL. lPA has leglLlmaLe flnanclal challenges, buL Lhey are belng
managed ln a responslble manner, and Lhe agency conLlnues Lo operaLe wlLhouL a slngle dollar of Laxpayer
subsldy Lo supporL lLs morLgage lnsurance fund-Lhe fund LhaL ls used Lo pay clalms on essenLlally all of lPA's
slngle-famlly lnsurance.
1he 2012 acLuarlal reporL lndlcaLed LhaL Lhe fund faces a caplLal shorLfall of $16.3 bllllon, or 1.44 percenL. 1he
reporL showed LhaL 17 percenL, or $2.8 bllllon, of Lhls shorLfall was due Lo Lhe Pome LqulLy Converslon MorLgage,
or PLCM, program-Lhe program Lhrough whlch Lhe lPA lnsures reverse morLgages. 1he reporL also shows LhaL
Lhe lund would have $13 bllllon more ln reserves lf Lhe seller-funded down-paymenL-asslsLance program had
never exlsLed. 1he more recenL esLlmaLes ln Lhe presldenL's budgeL lndlcaLe LhaL Lhe caplLal shorLfall ls $943
mllllon-noL an lnslgnlflcanL sum of money buL a subsLanLlal lmprovemenL from Lhe earller esLlmaLe. Moreover,
even lf Lhe fund needs a draw of $1 bllllon from Lhe u.S. 1reasury, LhaL would be a bargaln compared Lo Lhe
negaLlve flnanclal and economlc consequences llkely Lo have occurred lf lPA hadn'L played lLs key counLercycllcal
role durlng Lhe crlsls. Moreover, lPA's shorLfall ls noL a cash-on-hand problem, Lhe agency has $30 bllllon Lo
conLlnue paylng clalms, whlch ls enough Lo cover Lhe nexL 7 Lo 10 years. lLs mosL recenL books of buslness are
hlghly proflLable, and lPA has Laken numerous sLeps LhaL l'll deLall laLer LhaL wlll llmlL lLs losses and lncrease lLs
caplLal reserves.
1he lPA's losses also pale ln comparlson Lo Lhose of Lhe prlvaLe secLor-Lhe very flnanclal lnsLlLuLlons LhaL
Cyourko lmpllclLly and ALl expllclLly suggesLs should run our fuLure houslng flnance markeL. Ma[or Wall SLreeL
flrms and ma[or morLgage lenders-lncludlng 8ear SLearns, Lehman 8roLhers, Merrlll Lynch, CounLryWlde,
WashlngLon MuLual, and oLhers-dld noL have a pro[ecLed loss over Lhe nexL 30 years. 1hey wenL broke and were
shuLLered or sold aL Lhe cosL of bllllons of dollars of Laxpayer ballouLs. 1he lPA was needed Lo sLep ln Lo flll Lhe
vold for Lhese and oLher bankrupL prlvaLe flrms. WhaL's more, lPA loans are performlng far beLLer Lhan Lhe
subprlme loans Lhe prlvaLe secLor ploneered. Accordlng Lo Lhe MorLgage 8ankers AssoclaLlon's daLa for Lhe flrsL
quarLer of 2013, subprlme flxed-raLe loans had a dellnquency raLe of 20 percenL and subprlme ad[usLable-raLe
morLgages had a dellnquency raLe of 24 percenL, whlle lPA loans had a dellnquency raLe of 11 percenL. 1he lPA
number would be even lower lf lL dldn'L lnclude loans wlLh seller-flnance down-paymenL asslsLance, as l'll deLall
And Lhere's reason Lo Lhlnk Lhe slLuaLlon ls geLLlng beLLer: 1he slngle-famlly early perlod dellnquency raLe, an
lndlcaLor of Lhe sLrengLh of new loans, ls one-sevenLh of whaL lL was ln Lhe helghL of Lhe crlsls. Pome prlces have
been rlslng qulckly-aL Lhelr fasLesL pace ln seven years, accordlng Lo Lhe Case-Shlller lndex. And lnLeresL raLes
have remalned lower Lhan whaL Lhe acLuarles assumed ln Lhe 2012 acLuarlal reporL.
MosL lmporLanLly, lL's noL yeL clear wheLher Lhe lPA wlll requlre a Lreasury draw, we won'L know for sure unLll
SepLember. lL ls posslble LhaL Lhe numerous pollcy changes lmplemenLed by Lhe lederal Pouslng AdmlnlsLraLlon
wlll glve Lhe fund a poslLlve economlc value, as happened Lhe lasL Llme Lhe fund had a negaLlve economlc value ln
1990. uraconlan prlclng and underwrlLlng changes were also proposed durlng LhaL perlod, whlch proved Lo be
Moreover, Lhe Cyourko paper and slmllar reporLs offer a mlsdlagnosls of Lhe cause of lPA's flnanclal problems. ln
Lhelr Lake, Lhe maln problem ls Lhe facL LhaL Lhe lPA supporLs low-down-paymenL lendlng.
1haL dlagnosls ls ln error. lPA's losses come from Lwo programs: seller-flnanced down-paymenL-asslsLance loans
and PLCM loans. Curlously, Cyourko does noL menLlon Lhese programs ln hls analysls.
1he seller-flnanced program was a fraud-rlddled program LhaL essenLlally used lPA lnsurance Lo flnance down
paymenLs Lhrough arLlflclally hlgh sales prlces and loan amounLs. 1hese loans accounLed for 19 percenL of lPA
endorsemenLs beLween 2001 and 2008 buL drlve huge amounLs of lPA's losses-as of Lhe 2011 acLuarlal revlew,
41 percenL. 1oday Lhey accounL for 4 percenL of Lhe ouLsLandlng porLfollo buL 13 percenL of serlously dellnquenL
loans. WlLhouL Lhese loans, Lhe neL economlc value of Lhe forward loans fund would be a poslLlve $1.77 bllllon.
8esearch shows LhaL Lhe llfeLlme defaulL raLe of lPA loans orlglnaLed beLween 2000 and 2008 would be almosL 3
percenL lower wlLhouL Lhese loans-9.7 percenL versus 14.4 percenL as of lebruary 2011. 1hese loans are
ulLlmaLely expecLed Lo cosL Lhe lPA over $13 bllllon.
Puu aLLempLed Lo ellmlnaLe Lhese loans many Llmes buL was prevenLed by pollLlcal opposlLlon ln Congress unLll
Lhe Pouslng and Lconomlc 8ecovery AcL of 2008 banned Lhem sLarLlng ln Lhe second flscal quarLer of 2009.
Slmllarly, lPA ls faclng $3 bllllon ln losses from reverse morLgages lnsured Lhrough lLs PLCM program. AlLhough
Lhe PLCM program Lakes up [usL 7 percenL of lPA's porLfollo, lL accounLs for 17 percenL of lLs losses. WlLhouL Lhe
PLCM program, Lhe fund would have a poslLlve value, accordlng Lo Lhe presldenL's budgeL. lnsLead, Lhere ls now
Lhe pro[ecLed negaLlve $943 mllllon value.
1here are Lhree reasons lPA ls faclng losses on Lhe PLCM program. llrsL, hlsLorlc home prlce decllnes have meanL
LhaL banks cannoL recover Lhe full amounL of reverse morLgages when houses are sold, leavlng lPA llable for Lhe
shorLfall. AddlLlonally, borrowers are havlng problems meeLlng Lhelr Lax and lnsurance obllgaLlon, leadlng Lo
defaulL. 1hls has become a serlous problem: As of lebruary 2012, 9.4 percenL of acLlve PLCM loans were ln
defaulL on lnsurance and/or Laxes.1hlrd, ln recenL years larger numbers of esLaLe execuLors have chosen Lo have
Puu dlspose of properLles, drlvlng up cosLs for Lhe agency.
As l'll deLall, lPA ls Laklng sLeps LhaL address Lhese problems. 1he Pouse of 8epresenLaLlves has also recenLly
voLed Lo allow lPA addlLlonal auLhorlLy Lo prevenL losses ln Lhe PLCM program.
1he losses lPA ls faclng due Lo seller-flnanced down-paymenL asslsLance and PLCM loans exlsL prlmarlly because
of congresslonal lnacLlon, noL any fallure on Lhe parL of Lhe lPA. 1hese losses demonsLraLe LhaL lPA's core
buslness model of low-down-paymenL lendlng ls noL Lhe source of lLs flnanclal challenges. 1hey also don'L show
LhaL governmenL agencles prlce rlsk any worse Lhan Lhe prlvaLe secLor.
8ecause Lhe Cyourko paper assumes-buL does noL prove-LhaL low down paymenLs are Lhe cause of lPA's
flnanclal problems, lLs concluslons are aL odds wlLh Lhe reallLy of low-down-paymenL lendlng as wlLh Lhe facLs of
lPA's flnanclal problems. Many affordable homeownershlp programs, oLher Lhan lPA, have demonsLraLed Lhe
vlablllLy of low-down-paymenL lendlng.
1he unC CenLer for CommunlLy CaplLal has sLudled a large porLfollo of loans orlglnaLed Lo low- and moderaLe-
lncome households. 1hese loans are safe, susLalnable morLgages underwrlLLen for Lhe ablllLy-Lo-repay, and many
of Lhem have low down paymenLs. 1hese loans have performed remarkably well Lhrough Lhe crlsls wlLh
dellnquency raLes only sllghLly hlgher Lhan LhaL of prlme loans.
We can glean more lnslghL on Lhe wlsdom of ellmlnaLlng Lhe lPA-Lhe ma[or source of low-down-paymenL
lendlng ln Amerlca-from oLher sLudles. lor example, Lhe unC group has also examlned Lhe effecLs lmplemenLlng
a down-paymenL requlremenL ln morLgage rules LhaL are currenLly belng flnallzed. lf regulaLors lmplemenL a 10
percenL down-paymenL requlremenL, Lhe defaulL raLe for a caLegory of safe morLgages, so-called Cuallfled
MorLgage" loans, drops from 3.8 percenL Lo 4.7 percenL. 8uL Lhls sorL of requlremenL means LhaL 30 percenL of
Lhe loans orlglnaLed beLween 2000 and 2008 would be excluded from Lhe markeL deemed as safe by Lhese new
regulaLlons. WlLh a 10 percenL L1v [loan-Lo-value] requlremenL, nlne borrowers are excluded from Lhls markeL for
every one defaulL LhaL ls prevenLed. WhaL's more, Lhls requlremenL excludes 60 percenL of loans glven Lo Afrlcan
Amerlcans, 30 percenL glven Lo LaLlnos, 30 percenL glven Lo low- and moderaLe-lncome borrowers, and 40
percenL of loans glven Lo mlddle-lncome borrowers durlng Lhls perlod.
3. FHAs financial challenges are not due to its government status per se
A cenLral LhrusL of Lhe Cyourko paper ls LhaL lPA's ma[or problem ls LhaL lL ls a governmenL agency. ?eL none of
Lhe analyses of Lhe paper [usLlfy Lhls clalm. ln facL, curlously, Lhe mosL dlrecL connecLlon beLween lPA's flnanclal
woes and lLs governmenL sLaLus ls LhaL congresslonal overslghL llmlLs lPA's flexlblllLy Lo LermlnaLe programs or
make ma[or revlslons Lo lLs programs.
1he Cyourko paper pays slgnlflcanL aLLenLlon Lo varlous modellng challenges such as Lhe manner ln whlch Lhe lPA
esLlmaLes Lhe effecLs of unemploymenL. 8uL Lhose flnanclal managemenL declslons are noL due Lo Lhe lPA's
governmenL sLaLus, Lhey are due Lo Lhe managemenL Leam's professlonal experLlse and experlence.
1he Cyourko paper as relles on research of hls ALl colleague Ldward lnLo, buL lnLo's crlLlques also do noL
esLabllsh LhaL lPA's flnanclal problems are per se relaLed Lo lLs governmenL sLaLus. Moreover, much of lnLo's
work resLs on assumpLlons LhaL are LransparenLly blased and Lherefore undermlne much of lLs value. An example
of Lhls framlng can been seen ln a recenL reporL LhaL examlnes Lhe lPA 2009 and 2010 book years, a perlod lnLo
conslders Lo be well afLer Lhe markeL's collapse." ln reallLy, hls daLa seL beglns monLhs afLer Lhe ballouL of Lhe
counLry's ma[or flnanclal lnsLlLuLlons, Lhe beglnnlng of lannle and lreddle's conservaLorshlp, and Lhe freezlng of
Lhe naLlon's credlL markeLs. Pouslng prlces were sLlll ln free fall, and Lhe 2009 book also lncludes a number of
seller-flnance down-paymenL-asslsLance loans. AddlLlonally, lnLo presenLs a correlaLlon beLween lPA lendlng
and hlgh foreclosure raLes ln dlsLressed nelghborhoods Lo lmply LhaL Lhe lPA ls causlng Lhese foreclosure raLes. ln
LruLh, Lhese foreclosures are drlven by Lhe predaLory lendlng pushed ln Lhese communlLles durlng Lhe houslng
lPA has lmplemenLed a falr number of pollcy changes LhaL are deslgned Lo reduce lLs losses and make lLs lendlng
programs more susLalnable. 8eyond bannlng seller-flnanced down-paymenL asslsLance, Lhe lPA has also
lmproved lLs overslghL of lenders, made lLs underwrlLlng sLrlcLer-by requlrlng manual underwrlLlng for borrowers
wlLh credlL scores below 620 and u1l [debL-Lo-lncome] raLlos over 43 percenL and by lncreaslng down-paymenL
requlremenLs for borrowers wlLh credlL scores below 380-and moved Lo sell lLs dlsLressed asseLs more
effecLlvely. Cruclally, Lhe lPA has lncreased morLgage lnsurance premlums flve Llmes slnce 2009 and has begun Lo
collecL annual premlums for Lhe llfe of a loan. All of Lhese changes wlll have a poslLlve effecL on Lhe agency's
flnanclal poslLlon.
1he agency has also announced lL wlll lmprove lLs loss mlLlgaLlon pollcles, sLreamllne lLs shorL sale pollcy, and
move forward wlLh houslng counsellng lncenLlves or requlremenLs. All of Lhese changes wlll llkely save Lhe agency
money. Movlng forward, lPA needs addlLlonal auLhorlLy from Congress Lo manage lLs rlsk as effecLlvely as
posslble. lor example, Lhe agency needs beLLer auLhorlLy Lo LermlnaLe lenders who show excesslve raLes of
defaulL or clalms and Lo mandaLe Lhe Lransfer of servlclng rlghLs from lneffecLlve servlcers.
ln Lhe PLCM program, lPA ls also movlng forward wlLh changes LhaL wlll lmprove Lhe program and prevenL losses.
1he recenLly announced ellmlnaLlon of Lhe flxed-raLe sLandard PLCM program wlll mean LhaL borrowers should
have a beLLer ablllLy Lo meeL Lhelr Lax and lnsurance obllgaLlons, Lhus prevenLlng defaulLs. And Lhe lssulng of new
lncenLlves for esLaLes Lo dlspose of properLles wlll also decrease Lhe llkellhood LhaL Puu wlll have Lo bear cosLs
relaLed Lo properLy dlsposlLlon.
WhaL's more, Lhe 8everse MorLgage SLablllzaLlon AcL of 2013, whlch Lhe Pouse recenLly passed, wlll glve Lhe lPA
flexlblllLy Lo lmplemenL changes Lo Lhelr programs uslng morLgagee leLLers raLher Lhan Lhe ofLen-lengLhy
rulemaklng process. lPA plans Lo use Lhls auLhorlLy Lo make changes LhaL wlll dlrecLly address Lhe PLCM
program's observed problems, such as llmlLlng Lhe amounL of allowed upfronL draws and mandaLlng Lax and
lnsurance seL-asldes.1he lPA may also requlre a flnanclal and credlL assessmenL aL loan orlglnaLlon and
lmplemenL proLecLlons for spouses-reforms LhaL could furLher sLrengLhen Lhe PLCM program.
1he real problem for lPA relaLlng Lo lLs governmenL sLaLus ls noL whaL ALl lmplles, raLher, lL ls LhaL Lhe lPA needs
auLhorlLy Lo make sound buslness declslons ln real Llme raLher Lhan belng consLralned by congresslonal overslghL.
4. Improvements in FHAs management could enhance its financial well-being
ln addlLlon Lo Lhe pollcy changes already belng pursued by lPA Lo lmprove lLs flnanclal poslLlon, furLher
enhancemenLs Lo lPA's operaLlons mlghL be exLremely valuable. lnLo has argued LhaL Lhe veLerans Affalrs [or
vA] morLgage program has a number of beLLer pracLlces Lhan lPA. A number of Lhese recommendaLlons are
worLh conslderlng. lor example, we should examlne Lhe posslble lmpacL of lmposlng a resldual lncome
requlremenL aL Lhe lPA. We should also examlne wheLher lPA's seller concesslons lead Lo hlgher defaulL raLes.
lL's worLh noLlng LhaL Puu has been seeklng Lo lower Lhe amounL of seller concesslons slnce 2010. We should also
sLudy wheLher Lhe vA properLy-appralsal process ls more accuraLe Lhan Lhe process employed by lPA.
lPA can also learn from vA's servlclng procedures, whlch numerous commenLaLors have argued ls unlque ln lLs
emphasls ln lnLervenlng aL Lhe flrsL lndlcaLlon a borrower mlghL defaulL. Cn a separaLe noLe, lPA could make
lmprovemenLs Lo lLs loss mlLlgaLlon requlremenLs. lor example, by requlrlng servlcers Lo provlde clear proof LhaL
lL complled wlLh lPA's loss mlLlgaLlon guldellnes before Lhe agency pays ouL an lnsurance clalm.
5. A federally subsidized savings program for moderate-income families is an exceptional idea
Cyourko's paper proposes Lhe esLabllshmenL of a means-LesLed, governmenL-subsldlzed savlngs program Lo
replace lPA. erhaps l am Loo much of a flscal conservaLlve, buL replaclng a governmenL program-LhaL has
operaLed for more nearly 80 years, helped more Lhan 40 mllllon households Lo become homeowners, and has
never cosL Lhe Amerlcan Laxpayer a slngle dollar Lo shore up lLs lendlng lnsurance fund-wlLh a program LhaL wlll
cosL Laxpayers $1 bllllon per year whlle servlng only a fracLlon of Lhe currenL lPA program ls an ldea whose Llme
wlll hopefully never come.
Pavlng sald LhaL, Lhe reallLy ls LhaL Amerlcans do noL save sufflclenLly and LhaL lower- and moderaLe-lncome
famllles face parLlcularly large barrlers Lo savlngs. As a resulL, we should conslder a savlngs program wlLh Lhe
general deslgn feaLures proposed ln Lhe Cyourko paper. And lL ls refreshlng Lo have a conservaLlve endorslng Lhe
lmporLance of Lhls ldea.
Cyourko's ldeas Lo LargeL Lhe program Lo cerLaln populaLlons and Lo place resLrlcLlons on wlLhdrawal are
lmporLanL componenLs of hls vlslon. ?eL l do noL agree LhaL maLched savlngs accounLs should be managed
Lhrough a muLual fund. Consumer savlngs would be safer and beLLer managed Lhrough a less rlsky savlngs accounL
aL a local bank or credlL unlon. AddlLlonally, l belleve Lhere musL be some flexlblllLy regardlng Lhe governmenL
maLch, whlle resLrlcLlons are lmporLanL, a borrower should noL be penallzed for mlsslng hls or her savlngs goal
from Llme Lo Llme. l also belleve Lhe Lax-free sLaLus ls an unneeded Lax expendlLure LhaL may lnadverLenLly beneflL
hlgher-lncome parLlclpanLs. LasLly, l belleve we should explore expandlng such a program beyond houslng. Lower-
lncome households could use a wealLh-bulldlng savlngs program for a varleLy of purposes, lncludlng sLarLlng a
buslness, paylng a chlld's LulLlon, paylng excepLlonal medlcal bllls, and oLher necesslLles.
1he paper 8eLhlnklng Lhe lPA" provldes slgnlflcanL lnformaLlon on whlch Lo debaLe and dlscuss Lhe currenL
condlLlon and fuLure dlrecLlons for Lhe lPA. unforLunaLely, Lhe paper's flrsL senLence LhaL 1he lederal Pouslng
AdmlnlsLraLlon (lPA) has falled by any reasonable meLrlc" makes lL clear Lhe wrlLlng ls noL abouL offerlng a falr
and balanced revlew of Lhe lPA buL raLher Lo proclalm LhaL Lhe sky ls falllng and Lo ellclL a radlcal and dramaLlc
response. lf pollcymakers heed LhaL message, Lhey could undermlne one of Lhe mosL successful and lmporLanL
governmenL programs enacLed ln Lhe pasL cenLury.
lL's unforLunaLe LhaL ln Lhls greaL Llme of Lurmoll wlLhln Lhe houslng markeL, parLlcularly glven Lhe lmporLance of
homeownershlp Lo achlevlng Lhe Amerlcan uream for Lhe Lyplcal Amerlcan famlly, LhaL our debaLes and
dlscusslons cannoL more genulnely focus on Lhe real problems we face and Lhe opporLunlLles LhaL lay ahead. 8uL
by asklng me Lo commenL on Lhls paper, perhaps Lhls could be a flrsL sLep Lo dropplng Lhe rheLorlc and worklng
LogeLher as Amerlcans for Amerlca.
5)- 6.,, )0 . M#*)&, @#''&( ()7" 7"# 6#*7#, %&, 8-#,)9.* D,&+,#00 .*1 1)07)*+=)0"#1 09"&'., ()7" !"# N;;&,7=*)74
8+#*1.L !"# .=7"&, 7".*/0 E.2)1 M.*9"#O .*1 5#00)9. P.=0".' %&, 7"#), )*2.'=.3'# .00)07.*9# )* ;,#;.,)*+ 7"#0#

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