Time Right for FNM's 'Smart Commute' Plan

Fannie Mae came out with a mortgage program several years ago called Smart Commute that rewarded people for buying homes near public transportation by granting them additional buying power.

It wasn't well-promoted and pretty quickly joined the land of the living dead --still ongoing but not actively marketed -- where it resides even today.

But Fannie Mae(FNM) was simply a few years ahead of itself, I think. If the executives over there had any sense, they would pull the Smart Commute mortgage out of their files, dust it off and promote the heck out of it.

When the lending concern introduced this mortgage in 2003, credit was cheap, as were gasoline prices, but housing prices were high and rising higher. This made exurban homes, with their double-high ceilings, multiple bathrooms and long drives to job centers the best option for many homebuying families.

In fact, Patrick Hare wrote an article for Sierra magazine three years ago explaining how mortgage-industry practices actually have encouraged borrowers to choose sprawling suburbs over compact, environmentally efficient cities. City dwellers and suburbanites both use about 55% of their income on housing and transportation, he explains, but in different proportions.

Suburbanites, who have car payments, insurance and gas tanks to fill, spend about 30% of their income on housing and 25% on transportation. City folks have bigger housing bills that eat up 45% of their budget, but if they use public transit they spend only 10% of their earnings getting around. This is how they can afford their more expensive digs.