We’re paving the way to a big problem in housing.

Before I even go further, quick disclosure – at HousingWire we are advocates for homeownership, but what we advocate is responsible homeownership. Key word there – and the first word — is responsible. And this blog is my personal opinion, for the record. Homeowners plant trees. (That's a metaphor; I'm not being a hippie.)

OK, so everyone is aware that first-time buyers are holding on the sidelines. Some say it’s tight lending standards, but that doesn’t really hold water.

Mortgage applications have been largely flat this year so far.

For one, as Logan Mohtashami, senior loan officer at AMC Lending Group noted earlier this week on Lykken on Lending, lending isn’t tight. (Start around the 40 minute mark.)

Or, with a hat tip to Anthony Sanders, distinguished professor of finance at George Mason University and a member of the Fannie Mae affordable housing council, if you look at the lending standards now and in 2001, you don’t see a big difference.

Sanders looked at loan-to-value ratios and debt-to-income ratios from Q3 2001 and Q3 2013 (the latest quarter released to the public) and the results were that the average loan-to-value ratio in Q3 2001 was 75.91%. The average LTV in Q3 2013 was 75.84%. Likewise, the average debt-to-income was similar – hanging at 33.57% in 2001 and 33.63% in 2013.

So what else could be holding first-time buyers back?

Down payments?

Well, that makes sense on the surface. This economy and the post-recession recovery is a joke.

Even the biggest economic cheerleaders and dilettantes are seeing a systemic weakness in the economy.

According to RealtyTrac, home price appreciation is outpacing wage growth in 76% of U.S. housing markets in the last two years. The RealtyTrac report also showed that nationwide home price appreciation is outpacing wage growth by a whopping 13:1 ratio in the same time period.

But unlike the post-housing crash world where everyone was complaining about the harsh restrictions of 20% down payments, the good Dr. Sanders notes that right now, about two-thirds of first-time homebuyers use 0% and 6% down payment mortgages.

That’s right.

And first-time homebuyers account for 29% of all purchases – which is lower than the historical average above 40%, but seriously folks.

The GSEs will purchase loans with as low as 3% down. Freddie Mac introduced their 97% LTV program in March, while Fannie Mae’s was implemented in December.

And now, Fannie’s program is to put people with less skin in the game into mortgages.

How? Glad you ask. It’s by having first-time buyers take an online course.

Fannie Mae announced Tuesday the HomePath Ready Buyer program, under which qualifying first-time homebuyers can receive up to 3% of the purchase price of the subject property in closing cost assistance toward the purchase of a HomePath property. On a $150,000 home, this could result in up to $4,500 in savings for the buyer, Fannie said. In addition, Fannie Mae will reimburse the $75 cost of the homebuyer education course at the time of closing.

Are you kidding?

I haven’t gotten details on this program as of publication, but it can’t be much different or difficult than the online driver’s ed course people in most states can take to dodge a speeding ticket.

Granted, people getting loans backed by the GSEs may be lower income, but they generally have better credit than people getting Federal Housing Administration loans.

Still, the down payment, like the credit requirement, is all part of someone having to prove they are responsible enough for a loan this big.

Once again, though, well-meaning but intellectually lacking policymakers are getting the cart before the horse, thinking that being a homeowner is what makes a person responsible, rather than the fact that someone has to become responsible to buy a home. And they’re egged on by a lending and home-selling industry that only thinks in the short-term – the next commission or the next quarter.

This is another step in a bad direction, despite all the post-Dodd Frank reforms the mortgage industry has undertaken. 

The risk level of these government-backed mortgages is growing.

The American Enterprise Institute’s mortgage risk monitor showed that Fannie Mae, Freddie Mac, Federal Housing Administration, and VA loans all hit series highs in terms of risk in March. First-time buyer and repeat buyer NMRIs stood at 15.07% and 9.09%, respectively. They concluded that despite Qualified Mortgage rules, and because of the introduction of 97% LTV loans, risk is growing.

“QM regulation (is) not limiting volume of high DTI loans,” the report says. “Fannie/Freddie (are) not compensating for riskiness of high CLTV loans.”

This comes at a time when the GSEs, Fannie and Freddie, are themselves at an increasing risk. A March report from the Federal Housing Finance Agency’s Office of Inspector General says that while Fannie Mae and Freddie Mac returned to profitability in 2012, but that profitability is not a sure thing going forward.

The GSEs are undercapitalized, their profitability is questionable going forward, GSE-backed loans are getting riskier, and there’s a push on to put people into mortgages that they probably aren’t ready for, and may not have the resources to meet if they have a financial setback, given the state of wage growth.

“Again, compared to 2001 and 2007, income growth is abysmal as is real median household income,” Sanders tells me. “There just isn't the borrower base that there was. So should Fannie juice the market when borrowers are so weak? The answer, of course, is no. But Fannie is under enormous pressure from the usual lineup of suspects to ‘Go To Stupidtown’ to make risky loans again.”

I've called Fannie asking them to sell me on the merits of this idea, but haven't heard back yet. Maybe they can tell me something that allays these concerns, and once they do, I'll update.

Until then, this looks like one more cobblestone.

Taken together, there’s momentum for more of these well-meaning cobblestones, that when polished and laid out are creating a path toward taxpayers being on the hook big-time if — come on, more like when — this fragile recovery cracks.