Why Would That Be A Bad Thing?

If the government was out of the mortgage business, housing prices would be less.

The whole argument for government being involved with housing is that it is good for society for people to own their own homes. I'm pretty sure In and Out Burger is good for society, but it doesn't mean the government needs to subsidize it. What they really mean is government involvement with the mortgage business helps prop up existing home prices so landowners can be more secure in their investment. And the negative externality are the speculators (both banks and individuals) who profit from the propped up prices.

From instapundit:

If — as I think we should — we return to a situation where 20% down is the norm, it’ll be less, too. though not as much less. But the value of a house in a funny-money economy isn’t sustainable, which means that it’ll be less, too, eventually. Reality bites.

Makes sense to me.