The White House and the Congress simply cannot resist the urge to continue meddling in the housing market. Government meddling is what got us into the mess, yet they simply refuse to stop. Two items in The Wall Street Journal today caught my attention. The White House is looking to make the federal government a “national landlord,” and some of our representatives in Congress want to let Fannie Mae and Freddie Mac continue to back mortgages on McMansions. (Okay, maybe where you live a $700,000 home is nothing to sneeze at, but where I live, a $700,000 home is a McMansion.)
The first article: Government Considers Ways to Rent Foreclosed Homes:
The Obama administration is examining ways to pull foreclosed properties off the market and rent them to help stabilize the housing market, according to people familiar with the matter.
While the plans may not advance beyond the concept phase, they are under serious consideration by senior administration officials because rents are rising even as home prices in many hard-hit markets continue to fall due to high foreclosure levels.
[...]
But scattered-site rental programs could require the government to become a national landlord, an area where the mortgage firms have little experience. They also pose accounting challenges that could produce big upfront losses.
One proposal winning support among some federal officials would sell thousands of foreclosed federal properties to private investors who agree to rent them.
Investors would rehab homes, run the leasing process, and contract with national property management firms to handle day-to-day tenant demands.
The government could keep a stake in the venture, modeled on loss-share transactions by the Federal Deposit Insurance Corp. Officials have received interest from around a half-dozen private investors, according to people familiar with the matter.
I can see it now. When things go awry, they can then turn around and blame it on those evil private investors who got into bed with the government. Kind of like the way they now blame Wall Street for the mortgage-back securities that nearly brought down our financial system when the house of cards crumbled.
Which brings me to the second article, this one is an editorial piece. Fannie Mae’s Revitalists:
The issue concerns the so-called conforming loan limit, or the size of mortgages that the two government housing giants are allowed to guarantee. The amount was $417,000 before the housing meltdown, but in February 2008 President George W. Bush bowed to the Pelosi Congress and increased it to $729,750 for homes in the most expensive parts of the country. This was sold as a temporary measure, but in 2009 President Obama extended it.
The limit is now scheduled to decline on October 1 to $625,500, which is still far above the average U.S. sale price for existing homes of $236,200. The White House position, outlined in a February white paper and affirmed to us Thursday evening, is to reduce the limit on schedule.
Even this small reduction in taxpayer exposure is too much for the housing lobby, and right on time Republican John Campbell of California and Democrat Gary Ackerman of New York have proposed a bill to maintain the current limit for another two years. This would keep Fan and Fred in their dominant position in the U.S. mortgage market, while continuing to provide a taxpayer guarantee to an already heavily subsidized corner of the economy. Together with the Federal Housing Administration, these toxic twins now control 90% of the U.S. mortgage market.
For Mr. Campbell, this is becoming a bad habit. In May he sponsored a plan to create multiple “private” government-backed guarantors of mortgage securities in the unlikely event that Congress ever gets rid of Fannie and Freddie.
Sounding like Mr. Frank, the Orange County Republican now says the free market isn’t ready to finance mortgages without government guarantees. He says that people looking for “nonconforming” loans face almost impossible terms, including required down payments of up to 50%, plus additional cash in the bank as further protection for the lender.
If you follow the link you’ll find that those claims have been refuted.
Thankfully, the leaders of the committees in the House have rejected this plan, and the Obama administration claims to be against it. But Barney Frank now says the White House is on board, so we’ll see. No doubt they will try to ram this through while we’re paying attention to something like the debt ceiling, or some reality show. This will only make matters worse. And when these borrowers default, who are they going to find to rent these $700,000 homes? If someone can afford that rent, won’t they just buy a home for, I don’t know, say $500,000?
Here we are in this epic battle over the national debt and the future of this republic, and the folks in Washington are scheming to make the federal government a national landlord, and forcing the citizens to guarantee the mortgages of rich people. I don’t know about you, but this doesn’t sit well with me.
How many ways can these schemes go wrong?
Update: Republican Redefined linked – thanks!
Update 2: Maggie linked – thanks!
Tags: fannie mae, foreclosures, freddie mac, guarantee, McMansions, mortgages, national landlord, rent
There is no end to what the Left will go to in order to expand government control
Like or Dislike:
2 
0
One might better say, “There is no end to what government will do to expand it’s control.”
It wasn’t the Left that shoved the Patriot Act and the TSA up our arses.
People liken the partys to elephants and asses, I liken them to dried out cow pies, in the sense that every time you turn them over the same unsavory mix of dung eaters scurry for darkness.
Like or Dislike:
1 
0
Kindergarten to your childs graduation from College.
Progressive indoctrination. We are running against the wind and we are losing. The battle for America is in the final stages and it is lost.
What will America be like in 10 years…20 years….30 years.
I promise you and I will not recognize this country.
Like or Dislike:
3 
0
We could lower the annual federal deficit by undoing some of the mischief perpetrated during the Jimmy Carter era. De-fund and eliminate the federal Education Department. Its existence is unlawful, and it is little more than a front for the National Education Association and the American Federation of Teachers. Next, we should shutter the doors of the Department of Energy. The excuse that Carter and his cronies use to create that bureaucracy was to end American dependence on foreign oil. At that time, we were importing about 30% of our oil, and now we are importing over 60%. It is a failed experiment. Finally, we should get the government out of the housing business by getting rid of the Department of Housing and Urban Development, Fannie Mae, and Freddie Mac and repealing the Community Reinvestment Act. Together, this his would save taxpayers hundreds of billions of dollars a year.
Like or Dislike:
3 
0
“Finally, we should get the government out of the housing business by getting rid of the Department of Housing and Urban Development, Fannie Mae, and Freddie Mac and repealing the Community Reinvestment Act.” BINGO! Spot on! They created the mortgage-backed security in the first place, forced loans to people who couldn’t possibly afford to make the payments, and kept telling Wall Street that “Fanny and Freddie are solid” while 90% of their book was bad loans.
Why on earth would we continue to let idiots underperform rather than just fire their asses, as we do in the real world???
Like or Dislike:
2 
0
[...] After all, what’s the alternative? [...]
Like or Dislike:
0 
0
[...] The Lonely Conservative – What Could Go Wrong? Federal Government as ‘National Landlord’ – Fannie and Freddie Subsidizing McMansions [...]
Like or Dislike:
0 
0