Tuesday, September 29, 2009

$35 Billion More in Handouts / Bailouts Headed to Local Housing

While I am all for a 1st world country (especially the richest country on Earth*) providing shelter even for its worst off citizens, I don't really understand why being a renter has become a near crime in America.

*excluding debt

I am just going to post the programs as they come one after the other to keep them in the public conscience. Feel free to call your local Congress(wo)man and ask if you can contribute directly to these programs via direct with holding out of your paycheck, or if you have to waste time sending the money first to D.C. I am all for efficiency so I believe each reader with a house should knock on doors of local apartments and just hand out a few hundred bucks to each tenant. Why mess with the middle man (D.C.)? In fact, just shovel it under the door without bothering to knock - you can hit far more apartments in one evening. Your fellow "future homeowner" will react in glee ... I mean anonymous handouts of money via the mailbox is what the entire US economy is now about.

Again I have a very easy solution to ending this - have those who want this money go door to door to their neighbors to ask for cash directly ... whether they want to buy that shiny new car, or shiny new (or existing) home. Having to actually ask those neighbors (face to face) to break open their child's piggy banks might actually make the "consumers" of said "free money" think about where the money is coming from. I am all for supporting people in time of need when it comes to food or things of that nature.... but really, turning countless more Americans from renters into homeowners, is that now a birthright?

Just put it on the tab Ben! Time to chop down more money trees!

  • The Obama administration is close to committing as much as $35 billion to help beleaguered state and local housing agencies continue to provide mortgages to low- and moderate-income families, according to administration officials. (again, it is one thing to help people retain a form of shelter - it is a whole different animal to steal from one generation to get a the current generation into homes)
  • The move would further cement the government's role in propping up the housing market even as some lawmakers push to curb spending at a time of rising debt. (speaking of cement, I believe that's the perfect word for what we are putting on our future generation's ankles - in 15-20 years we can drop them off the boat directly into the ocean and our work here will be done)
  • The effort, which could be announced as early as this week, is aimed at relieving pressure on government-operated housing finance agencies, which have been struggling to find funding amid the downturn. These agencies, or HFAs, are a small part of the housing market but are critical to many first-time and low-income home buyers, who can get lower-rate mortgages through an HFA than they could through a private-sector lender. Rates are typically 0.5 to one percentage point lower than commercial lenders. (HFA... FHA... tomato... potato)
  • Some state HFAs guarantee loans while others originate mortgages. The agencies also develop affordable multifamily housing or provide financing to developers of such housing.
So again, all these government programs that subsidize rates (or directly handout money which has been the latest evolution) - serve to drive up prices of homes. ABOVE where they would be in a non subsidized market. So what happens next? As people cannot afford the new subsidized prices, more and more government programs are necessary to chase the elevated home prices because people cannot afford them... do you see the circular nature of all this? If not, just look at our university system....
  • The program could be in place for as long as three years, and would involve the administration essentially buying the debt that these housing agencies rely on for financing.
  • The Treasury Department, along with government-controlled mortgage giants Fannie Mae and Freddie Mac, is expected to buy as much as $20 billion of new housing bonds issued by the state agencies.
  • It will also provide $15 billion in additional funding, as needed, to help the agencies continue to use a type of cheap, short-term financing.
Why not - last I checked the government is here to provide military, pass laws, and be a landlord.

Of course nothing can go wrong here....
  • If the housing agencies default on their debt obligations, taxpayers could lose out. The Treasury plans to charge fees to agencies that want to sell new long-term bonds to the government based on their individual risk factors, to help reduce the risk of default and protect taxpayers.
Details, details. Just do it ... put another notch on the IOU bill. And when this program serves to drive up the prices of low income housing - well that's when the next program to "help" will be announced. Which will in turn drive prices even further, at which time the next program will be announced.


Not sure if "The Atlantic" is considered "left" or "right" but I agree with their assessment: however the author is one of "those people"... yes you know. I don't want to the say the word publicly. It's shameful... ok, I will. He is... a... a... renter. (boo hiss)

Hmm... this sounds vaguely familiar. The government subsidizing the mortgage market making credit artificially easy -- oh yeah! That was one of the reasons why the mortgage market overheated, and we fell into a deep financial crisis. Have we learned nothing?

Mortgages should only be provided to individuals with solid credit, income that can support their mortgage payments and a sufficient down payment.

Now don't get me wrong: some low- to moderate-income individuals may, very well, fit into that mold. But if they do, then they don't need subsidized mortgages. They should be able to acquire financing the good old fashioned way: through a bank willing to bear the risk. Anyone who can't pass through reasonable underwriting criteria for obtaining a mortgage shouldn't be given one. I know "rent" had become one of the dirtiest four-letter words in America during the past decade, but it's really not immoral to require those who cannot afford homes to rent instead. I rent and don't feel like society has wronged me as a result.

What's so bad about their renting until the market is willing to take the risk on their mortgage instead of the government?

Cue the music! Dooo doo doo do do do doo do.

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