And so Gyourko calls for replacing the FHA with a subsidized savings program aimed at helping low-income borrowers accumulate a 10 percent down payment, a policy he describes as preferable for a number of reasons…
2. Focusing on borrowers helps ensure that benefits will flow to the intended beneficiaries rather than realtors and homebuilders.
From a public choice perspective, the realtors and the homebuilders are the intended beneficiaries. People with modest incomes are what Thomas Sowell calls the mascots for the policy. The housing lobby isn’t going to come out and say that they engaged in rent-seeking. They tell you that if you abolish FHA, you will be depriving people of the American Dream™.