BofA CEO Speaks on Future of Housing in America

""Speaking"":http://www.brookings.edu/events/2012/12/14-homeownership-moynihan#ref-id=20121214_Moynihan1 before the Brookings Institution in Washington, Bank of America CEO Brian Moynihan raised the issues of whether homeownership is right for everyone and how the mortgage market will be financed in the future.

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While most Americans continue to include homeownership in their personal image of the American dream, Moynihan says, ""as a just democratic society, we owe all our citizens a safe, good place to live, but a roof over one's head doesn't always have to come with a mortgage. In some cases, it shouldn't come with that.""

Homeownership is valuable, but changes in today's economy can make it less viable for some families, according to Moynihan.

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Over the years leading up to the housing crisis, ""the laudable goals of an ownership society evolved from building long-term equity to cashing in on short-term gains. In many cases it became less about a safe place to live and more about making profits,"" Moynihan stated.

For eight consecutive quarters leading up to the crisis in 2005, Freddie Mac reported cash-out refinances exceeded 80 percent of all refinances that took place.

Moynihan posed the question of whether these types of refinances should come with a government guarantee.

The volatility of household income has risen 30 percent in the past four decades. Combined with higher unemployment, these factors make flexibility increasingly important in America.

""A 30-year mortgage does not provide flexibility in some cases,"" Moynihan stated.

As to the future of housing finance and the government's role in that realm, Moynihan says there is no practical alternative to government participation at this point.

""Will it go away? Maybe, but I think that's a decade or two in transition, not a five-year transition,"" he stated, explaining, ""because the amount of investment capital and the sustained level of debt in housing in America is not going to some without liquidity and guarantee.""