There are currently two bills in Congress that have been proposed to supposedly “fix” the current mortgage crisis. The very same mortgage crisis that was caused by big government intervention into the mortgage business sector in the first place by the wizards of Congress. Millions of honest, hard-working people are struggling to stay in their homes today. They now owe way more than their house is worth, thanks largely to Congress mandating the ignorant “everyone has a right to own a home” programs which forced lenders to hand out loans to high risk /unqualified borrowers in the first place. Fannie Mae and Freddie Mac first started gobbling up sub-prime securities due to mandates they received from Congress in 2000, and the Clinton-era Housing and Urban Development Department, ( (HUD) which attempted to make housing “more affordable to minorities and disadvantaged people by using their vast (soon to be taxpayer- funded) resources to purchase massive amounts of sub-prime mortgage securities. In 2000, Fannie and Freddie held less than 2.5% of the mortgage market, then it expanded to hold over 40% by 2004. Today? Fannie and Freddie now guarantee more than 70% of all home loans in America. As foreclosures hit record highs almost every month during the past two years, Fannie and Freddie are now bleeding your tax dollars at an ever-increasing rate and the government wants to once again take action to stem the foreclosure crisis. (While also covering up the fact that their meddling in the mortgage business caused this crisis to begin with)
President Obama refused to deal with the Fannie and Freddie tax-payer funded black hole with his “supposed” Dodd-Frank Wall-Street Reform and Consumer Protection Act last year. Now the Democrats and Barack Obama are bashing the Bank of America for charging $5 a month debit card fees, which were needed to stem the bleeding caused by the Dodd-Frank bill in the first place. This is exactly why people are fed up with big government control and intervention into every aspect of our free market system today. The Dodd-Frank bill is set up to allow the U.S. Government to close all small banks in the U.S. through their fake “stress tests” and then create a central government-run banking system. Check the proof that backs up that statement from ABC News Business Blog:
“The Federal Deposit Insurance Corporation (FDIC) announced its 73rd bank closure this year, pacing well behind the gargantuan number of 157 total bank closures in 2010.” (emphasis mine)
When the Federal Government closes all the small independent banks in America, who in the hell do you think will control the entire banking system then? This is exactly why Newt Gingrich constantly repeats the statement that we need to repeal the Dodd-Frank bill on day one of the new GOP President’s administration in 2013. Government control of our entire banking system is a clear and present danger to our free market system.
When we add the Federal Housing Authority to Fannie and Freddy’s percentage of all home loan mortgages we see direct government control of 90% of all U.S. mortgages! Now that the damage and wealth redistribution has been done by government intervention into the mortgage industry, we see that Fannie and Freddie are backing off of Jumbo housing loans in an article from The Real Deal Online;
In its bid to reduce taxpayers’ $141 billion exposure to housing mortgage risk and spur private investment in the sector, Fannie Mae, Freddie Mac and the Federal Housing Administration stopped backing jumbo housing loans. According to the Wall Street Journal, that move could put the housing market, and specifically housing prices, in a further funk.
Government meddling has the housing and mortgage industry in a shambles, so now they want to make the banks pay the price, which we see here:
The three entities ( Fannie, Freddy and the FHA) backed about 90 percent of home mortgages in recent months, thanks to the expanded loan limits. But the limits were restricted this month, meaning more buyers will have to turn to private banks to secure mortgages. Those loans are harder, and more expensive, to obtain. Banks would need to issue 56 percent more jumbo mortgages to fill the gap.
So what are the wizards of Congress to do to fix the very mess they, themselves have created in the mortgage debacle in America? Why, let’s propose two more government mortgage refinancing bills in Congress shall we? Current House resolution 363 is titled The Housing Opportunity and Equity Act. Current Senate bill 170 is titled the Helping Responsible Homeowners Act. Two different bills with two very different agendas, from savingtoinvest.com:
|Housing Opportunity and Mortgage Equity Act (H.R. 363)
|| • Allows for refinancing of loans owned or guaranteed by Fannie Mae and Freddie Mac.
• Both current and delinquent borrowers are eligible.
• Prohibits appraisal to establish current loan to value.
• Limits interest rate and fees borrower may be charged on new loan.
|Helping Responsible Homeowners Act
| • Allows for refinancing of loans owned or guaranteed by Fannie Mae and Freddie Mac.
• Borrower must be current on existing mortgage.
• Removes limit on current loan to value.
• Limits interest rate and fees (including loan level price adjustments and delivery fees) borrower may be charged on new loan.
Look at HR 363 above. They want to help BOTH those who are current on mortgage payments and those who are delinquent. (what about proven ability to actually pay for the loan there?) They also want to prohibit appraisals on the homes being refinanced! Who, in their right mind would ever refinance a home loan without getting an appraisal to make sure it hasn’t been destroyed or burnt to the ground beforehand? The Senate bill would seem to be a more responsible way to help folks who are under water in their home loans today, but in today’s “compromising” Congress we can bet that the final bill will continue down the path towards the “everyone deserves a home whether they can actually pay for it or not” ignorant Liberal ideology. President Obama was scheduled to give another speech about what he plans to do about the mortgage crisis last week, but that didn’t happen to my knowledge.
Pay attention as Congress tries to fast-track some form of Mortgage Refinancing plan once again in the coming weeks. Just remember the fact that, while the wizards of Congress are up in DC making wonderful speeches about their “newest fix” for the mortgage crisis plans, the fact remains that they are the ones who created the crisis in the first place. 2012 just can’t get here fast enough!