Making Home Affordable

Democracy and free speech, what a great combination.  Our good friends at ACORN (I thought they had changed their name due to the bad publicity they had recently received) are at it again.  They “Will Demand Participation in Obama’s Foreclosure Prevention Program from Goldman Sachs’ Litton, Barclay’s HomEq, American Home Mortgage, and OneWest.”  ACORN apparently organized protests in 14 cities to protest the fact that four private companies did not partake in Obama’s “Making Home Affordable” plans while allegedly 80% of the other mortgage providers in the country are doing so.  Thus these four private companies that chose, for whatever reason, not to participate in a government program are labeled the “Home Wrecker 4.”  Cute.  Stupid but cute.

What is the “Making Home Affordable” plan?  It is an Obama Administration plan executed by the U.S. Department of Housing and Urban Development or HUD as it is normally known.  Its goal is laudable; it is to help the “Many homeowners (who) pay their mortgages on time but are not able to refinance to take advantage of today’s lower mortgage rates perhaps due to a decrease in the value of their home.”  Who can be against something like that?  Certainly not me.  Let’s pull the covers back a bit and see what else there is about this plan.

The eligibility for the program as originally designed has four general qualifications; you may qualify
"* If the home you want to refinance is your primary residence,
* The loan on your home is controlled by Fannie Mae or Freddie Mac (it must be a conforming loan — you can call Fannie at 1-800-7FANNIE and Freddie at 1-800-FREDDIE or submit online forms with Fannie and Freddie), and
* If you’re current on your mortgage payments (meaning you haven’t been more than 30 days late on your mortgage in the last 12 months)
* If you have sufficient income to support a new mortgage.”

The Secretary of HUD recently changed the rules slightly in two ways:  it now allows people whose homes are up to 125% underwater to qualify for government backed loans and changed the maximum loan that qualifies to $729,750 from the previous ceiling of $419,900.  That is, even though homeowners owe more than their homes are worth on the open market, the government will back the new loans.   As these people are unable to refinance since their homes aren’t worth the risk to the lenders, the old reliables, Freddie and Fannie, “will now be allowed to refinance those loans.”  As I recall the whole economic meltdown started with the abysmal loans Freddie and Fannie were encouraged to make by both Democrat and Republican administrations.  Now the same organizations, which are still not healthy despite the government bailouts, are going to provide more high risk loans?  Does this make sense?  Didn’t we learn anything at all by the meltdown? 

At least Freddie and Fannie learned a little something.  “In March, Fannie Mae said it would no longer guarantee mortgages on condos in buildings where fewer than 70 percent of the units have been sold, up from 51 percent.”  Freddie is planning on implementing the same policy in July.  Of course since the policy makes sense and is an attempt to restore fiscal responsibility to the corrupt government sponsored entities, the House Financial Services Committee Chairman, Barney Frank (D-MA) and Representative Anthony Weiner (D-NY), want Freddie and Fannie to review their new policy as it "had a real chill on the ability to get these condos sold."   In other words, since there are people that “would” buy these condos if they had access to credit, Fannie and Freddie should exacerbate the existing problems that we are trying to work through to get more unqualified buyers back into the market.  This is exactly the situation that was caused by Freddie and Fannie initially lowering their borrowing standards at the instigation of ACORN, among others, and supported by the Congress passed Community Reinvestment Act. 

Our Congress has lost its collective mind.  A reasonable plan to tighten the loose credit that caused the problem is created and immediately Bailout Barney wants to revoke it.  They have no concept about fiscal responsibility and no desire to find out about it.  Obama and his willing accomplices in Congress and the MSM want to remake America into something we won’t recognize in so many ways it staggers the imagination.  I’m still at a loss as to what is wrong with “life, liberty, and the pursuit of happiness.”  We should toss all the clowns out along with the current administration and all their czars.

Comments

[Andrew Smith]

Look at that, 7 days since the last blog and Timo has to come back to make a post with some actual information in it, instead of a personal attack. Good on ya, guv.

Funny that this "Making Home Affordable" will make us all less able to afford everything since it encourages stupid and risky investment and will, of course, pile on more debt and the inevitable inflation that comes with it. Actually, I might have to go to some of those ACORN protests since they are taking place at Federal Reserve banks! The more heat on those dogs, the better.

No, in all seriousness, the sad fact of it is that in the eyes of Congress, the neocons and ultraliberals, every American not only has the right to free income and welfare, but also health insurance, and now "affordable housing". That's a major contradiction in terms considering nobody can afford to buy a house outright, and to own a home, we must not only take out a hundred thousand in debt and take 30 years to pay it off, but also pay tribute to the almighty state through taxes and keep our pseudo-possessions up to their lofty building codes, which, if the cap-and-tax plan passes, will tell us where our electrical sockets must go and which lightbulbs we must use. Talk about the American dream! Then, we get to pay more for subsidized public transportation we don't use, failing schools which are financial black holes, and as our "investment" increases in value? Oh yeah, pay more! If that magical thing called the business cycle takes a turn for the worse, well then if we do have the luck to keep our houses, we get to pay for all those people who can't, and help them get better loan terms as a reward for falling behind on their payments. I wouldn't blame the poor folks who are losing their homes; they were just rolling with the crowd and taking part in that "American dream" that all those smart Congressmen made possible with their federally insured mortgages financed by fiat dollars borrowed from China, and the big three (Greenspan, Vlocker, and Bernanke) keeping interest rates low so everyone can partake in this celebration of debt and misery. Thanks guys! They're like Robin Hood, except for the green vests and tights (well maybe the tights, we don't know much about what goes on a Goldman-Sachs holiday parties). Barney was probably there and had to leave early.

I would think this is a joke except that it's par for the course; absolutely no different from the last 8, 12... 16... nah about 30 years. Gotta pump up that housing market so our Wall Street buddies can make the green! Americans will be OK, we'll just bail them out and there will always be enough Madoff money to go around, right?

"President Hu, can I borrow a fiver? Yeah, tack 9 zeroes on that bad boy."

Thanks Timo, I needed to vent. Guess I'm gonna be writing some more letters to our fearful leaders tomorrow.

[Jon M.]

There has been much speculation about what sort of taxes Obama and the Democrats will have to impose to pay for all the things they want to do. There is one thing that the US allows to be written off at tax time that no other country (that I know of) allows and therefore will probably become a tax target. That is the personal home mortgage interest. We probably won't hear much about it until after the 2012 election, but that tax target is too lucrative to be ignored considering the current government debt situation. Don't say impossible. If you remember, there was a time when all personal debt interest could be deducted from income. There was much screaming, but it went away. If the mortgage interest writeoff goes away also, there probably be a major decline in home ownership because there will be not much incentive to own a home as opposed to renting it, just like in most other countries and a collapse of urban sprawl.

[Bob Kelley]

Nothing like the word ACORN to get the tinfoil hat brigade in formation. This is just another attempt to pin the nation's economic meltdown on the minorities, Democrats, etc. The old Reich-wing logic is debunked here: http://www.newsweek.com/id/162789 , I'm sure there's even less substance to the new wave of hysteria. I confess I got halfway through little T's post and then quit, maybe that qualifies me to be governor of Alaska.

[justmeiguess]

I started with nothing, worked HARD, bought my home at 25, went to college in my 30's while raising two kids as a single parent. I, for one, am sick to death of MY tax dollars going to pay for other peoples bad decisions. I, like everone else, received all those phone call from fly by night mortgage companies wanting to "help" me out. My standard line to them was that if I had to finance my home through a company that has to drum up busines by harrasing people over the phone, at night, I probably couldn't afford to own a home.

[Timo Kokko]

Jon M.
Good bit of analysis. Could be another major step toward the Europeanization of the US.

Bob,
If you weren't so repetitive, you would be amusing. I believe, had you read my post, you may have determined I believe it was government, particularly Democrats such as Barney Frank, that caused the problem through the CRA, Freddie, and Fannie.

[Ceart]

Bob - I read Daniel Gross occasionally, and agree with him occasionally. Not this time. Nobody blamed minorities on the housing and financial crisis, as his headline would have you believe. You can get the slant of his article by this one bit: "economic know-nothings whose opinions are informed mostly by ideology and, occasionally, by prejudice". Daniel Gross may not be an economic know-nothing, but you don't have to read much of his writing to figure out he is pretty close to being a "government policy know-nothing" whose opinions are informed mostly by ideology and, occasionally, by prejudice. Very typical for the liberal media.

As for the "tinfoil hat brigade", would that be somewhat similar to the "Obama kool-aid drinking minions"?

[brynb2]

Ceart, ceart, ceart. "Nobody blamed minorities on the housing crisis"? Really?

September 16 edition of Your World, Cavuto said to House Majority Leader Steny Hoyer (D-MD): "[Y]ou wanted to encourage minority lending -- obviously, a lot of Republicans did as well. There was a lot of -- expand lending to those to get a home," Cavuto went on to ask, "Do you think, intrinsically, it was a mistake, on both parties' part, to push -- to push for homeownership for everybody?"

Discussing the decision by the U.S. Treasury Department and the Federal Housing Finance Agency to place Fannie Mae and Freddie Mac into conservatorship, Cavuto asked Rep. Xavier Becerra (D-CA) on September 18, "[W]hen you and many of your colleagues were pushing for more minority lending and more expanded lending to folks who heretofore couldn't get mortgages, when you were pushing homeownership ... Are you totally without culpability here? Are you totally blameless? Are you totally irresponsible of anything that happened?" Cavuto later said, "I'm just saying, I don't remember a clarion call that said, 'Fannie and Freddie are a disaster. Loaning to minorities and risky folks is a disaster.'"

On "This Week" Sunday, March 30, 2008. John Kyl blamed it on minorities:

JON KYL: "Well, first, I wondered how long it would take my friend, Chuck Schumer, to blame the Bush administration here. Of course, it wasn't the Bush administration, as much as it was Democrats in congress, who were pushing the lending institutions to get out there and lend more money, even to unqualified buyers. To minorities, to the poor, to the young, so that everyone could own a home. The Bush administration was somewhat to blame for that, as well. But Democrats in congress were making that push."

Need more people not blaming minorities for the housing crisis? I can dig them up. These only took about 2 or 3 minutes.

[Ceart]

They are not blaming minorities or any other demographic that took a loan. They are blaming the process and system of forcing and coercing banks and other lending institutions to lend money to people that cannot afford to repay. The majority of those seeking the loans were minorities because groups like ACORN and the ACLU kept up the cries of "redlining" and "discrimination".

[brynb2]

And, by trying to deny that people are blaming minorities for the housing crisis, Ceart goes on to...

wait for it....

BLAME THE MINORITIES FOR THE HOUSING CRISIS!!

[Timo Kokko]

brynb2,
You are absolutely mistaken, I suspect intentionally, on saying Ceart blames the minorities. He clearly states it was the government policy, not the minorities fault. If the preponderance of the people who took advantage of the government's stupidity happened to be minorities, which is reasonable as that was who the programs were aimed at, then that is not blaming the minorities. It is appropriately blaming government for the problem they created. In our entitlement society is is easy to take the gift of a house you can't afford if the government insists the banks lend money to you. I certainly would take free (or nearly free) money were I given the chance.

[brynb2]

No, Timo. Minorities were not getting loans, EVEN WHEN THEY COULD AFFORD THEM. ACORN fought redlining, and more minorities got loans. Believe it or not, some minorities actually have enough money to BUY those homes. I know, hard to believe, but it's true.

The housing crisis was because the banks were giving loans to people under fraudulent practices. Some were white, some were minorities. However, to some people, A + B = C. More minorities got home loans, that equals housing crisis.

Here's the kicker. Even when minorities had A+ credit, and high paying jobs, banks were giving them SUB PRIME loans. Again, that's why it is the minorities fault.

Either way you slice it, you guys are still blaming the minorities.

1. for being stupid and taking the stupid government entitlements

2. for being a preponderance of the people taken advantage of (sort of like women being a preponderance of the victims of rape are just dumb, too)

3. for being too stupid to realize that if you're a minority, you should know better that when something looks legitimate, it probably isn't.

[Ceart]

It will never change. The libs will continue to play the victim card and blame it on the right. Brynb2 sure can twist twist things around. Here we are, defending minorities as a group, and she wants us to look like racists. Instead of reading between the lines and twisting meanings, please show me one quote where a prominent person actually says the housing and financial crisis was the fault of minorities.

[Andrew Smith]

"The housing crisis was because the banks were giving loans to people under fraudulent practices."

Absolutely untrue. There is nothing fraudulent about a subprime loan itself, or low interest rates, or a precipitous decline in home prices. SOME of the loans made were done under false pretenses but nowhere near the majority of them, so those loans were absolutely NOT the cause of the bubble. brynb is an absolute master of twisting the truth, worthy of a neocon. Minorities did not cause the housing crisis any more than white people did because a majority of the loan holders were white. As Timo said, if a bank comes to you and says you can afford a house if you sign up for this loan where you pay only interest at first, and later your payment doubles (presumably when you are making more money), then some people are going to bite, especially if its the only way to get a loan to own a home. Banks were banking on these loans, bundled them, sold them as investments. The federal government guaranteed the loans, bought them outright, or insured them. The Fed kept interest rates absurdly low to further the government's objective to keep housing booming and allow every American to own a home despite their financial circumstances. There's your financial crisis in a nutshell and it has nothing to do with minorities, nor did anyone suggest that they were to blame, but when you lend a ton of money to people who were previously unqualified just a few years ago, what do you expect would happen? There were some minorities who were now able to get loans who could not before (because they should not have, because they were unable to make the payments on TRADITIONAL loans), and some of them were minorities, but nobody even came close to suggesting that it was BECAUSE they were minorities that this was the case. As Ceart indicated, this is a typical liberal tactic to paint those who cite the facts as trying to keep poor people down and defend big banks. Ironic, considering many of us feel the banks should not have been given a dime and should have been allowed to fail. I guess we're all unfeeling racists because we don't think free money actually exists and everyone should be able to own a home.

[Timo Kokko]

brynb2,
An example of your logic is everyone should be happy now because those evil businessmen and big corporations can't get loans either; it is a totally level playing field. Instead of raising the standard of living for everyone (or even maintaining the existing one), including the poor and minorities, the left's plans have everyone getting poorer with no chance of loans.

[EmersonsZen]

Interesting thread Timo. It brings all of the components of the mortgage/housing crisis together on one page.

It also has created a microcosm reflective of the ignorance of most libs when it comes down to the causes of the crisis.

We have Barney Frank on tape, before congress, touting the strength of Fannie Mae and Freddie Mac, when it was clearly on its way down. Frank, Dowd, and The Messiah all on Mae's and Mac's payroll.

And yet who do the libs blame? Why it's those minority-hating republicans who are really at fault.

Pull your heads out libs. As long as democrats can maintain minorities in permanent victimhood status, the dems can maintain their power.

Think about it.