Regarding government (over) involvement in the mortgage market–something that has become a given and without which few mortgages would ever get done–This is a good read. It appeared in Today’s New York Times Opinion Page by Bethany McLean..

For a homeowner, a mortgage with a 30-year fixed rate (especially one that he can pay off early without a penalty) is a wonderful thing. For lenders and investors, however, it is a financial Frankenstein’s monster, an unnatural product filled with the potential for losses. Absorbing some of the risk of those losses is a large part of what the government does in the housing market……

….After all, other countries manage fine without the widespread availability of 30-year fixed-rate mortgages. But is there an American politician alive who would accept responsibility for depressing the housing market further?….

Read the rest here