Obama Can't Fix Housing Without 30-Year Mortgage War

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BY DAVID REILLY

You can't ride two horses at once. But the Obama administration, in proposals to revamp housing finance, doesn't pick a steed.

At the heart of three options discussed in a policy paper from the Treasury Department on Friday is a conflict: Keeping the popular 30-year, fixed-rate mortgage with a prepayment option is largely incompatible with the goal of "putting private capital back at the center of a healthier" housing-finance system.

A return of private capital requires the revival of securitization markets for mortgages not backed by the government ...

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