Many factors are keeping downward pressure on home prices and making home ownership less attractive. The obvious ones include high unemployment rates and perceptions that the real estate market has not yet bottomed out; but several underlying and less obvious factors implemented by the big banks and in Washington, DC, are cuffing the invisible hand of the housing and mortgage markets, and causing significant roadblocks on the road to economic recovery.

There is a consensus that exotic and risky loans that were peddled by big banks and resold on the secondary market in years past have had a significant impact on the today's housing market and mortgage environment, but the banks' secondary marketing campaigns for these loans has proven to have been much more damaging. In the aftermath, mortgage brokers, appraisers, and real estate agents have taken the brunt of the criticism, and are now the subjects of supposed "consumer-protection" legislation that will further erode potential borrowers'/purchasers' ability to obtain competive loan products and pricing.

In addition, banks have badly mismanaged their foreclosures and caused more apprehension in the population of potential homebuyers through the "robo-signing" scandal, their unwillingness and/or inability to offer relief to underwater homeowners, and new underwriting policies and guidelines that are keeping qualified borrowers away from the closing table.

Currently, legislators are slated to implement the Dodd-Frank Act, which will cause commissions for loan transactions that secure real property to be set by loan amount only, and not influenced by rate. If implemented, these proposed mortgage regulations will eliminate a loan originator's ability to charge less for the exact same loan products offered by the big banks, which will cause consumers to pay more for services. The banks are behind the legislation because it will shift the competitive balance of power in their favor. On its face, the Dodd-Frank Act may seem like a good idea, but when you look into what the law would require and what the actual consequences are, if implemented, its is exposed as more double-speak and smoke and mirrors.

Instead of eliminating competition, and driving the costs of obtaining financing up, the government needs to take a step back and let the housing market correct itself without artifical market restricitions.