How to Make Sure Housing Never Becomes Affordable Again.

The Minority Report ^ | 7 August 2007 | .cnI redruM

[.cnI redruM]

Senator Clinton waxed philosophical on the problems faced by holders of sub-prime mortgages. She looked into the abyss and the abyss gave her yet another chance to pander. Thus spake Caligula Rodham Clinton.

"Today, we have a choice. We can look at the statistics, wring our hands, and continue to do nothing, or we can do what America has always done in times of difficulty: acknowledge that we face a real challenge, and confront it head-on with real solutions," said Clinton. "I think the choice is clear. I think we need to act now, with smart, practical solutions to strengthen our housing and mortgage markets. If I were President, I would address abuses across the mortgage industry with a plan to curb unfair lending practices and hold brokers and lenders accountable, give families the support they need to avoid foreclosure, and increase the supply of affordable housing."

Her policies to make these things happen would be music to the ears of Pierro Srafa’s Ghost. It would take a whole village full of suckers, I mean taxpayers, to bring Hillary’s foreclosure prevention program to fruition.

Establish a $1 billion fund to assist state programs that help at-risk borrowers avoid foreclosure. Hillary will establish a $1 billion fund to support state programs that help at-risk borrowers avoid foreclosure. Some state programs help borrowers make the single payment necessary to become current on their loans; others help borrowers renegotiate their loan terms, or simply provide financial counseling. These foreclosure mitigation efforts are more important than ever right now. Federal assistance for state programs that assist at-risk borrowers supplements Hillary's call earlier in the year for "foreclosure timeout." At-risk borrowers and lenders should be encouraged to work out alternatives to foreclosure.

Hillary won’t establish this fund without redirecting a nice, hefty portion of the paychecks of taxpaying Americans into the US Treasury. A “foreclosure timeout” is really scary. That means the bond holders of bundled mortgage securities had better go ask Her Highness for some tips on the cattle futures markets. Those banks will either petition the government to freeze the interest on all mortgage backed debt securities, or they will start experience failure.

If the banks get an “interest payment timeout”, look quite closely at the holdings of your employer’s pension fund. I’m guessing that a lot of large institutional funds buy this paper in bulk. It would certainly make being a mortgage banker more stable if the bonds representing the bundled loans were moved quickly and in large numbers.

Hillary continues plotting how she’ll give us our next major economic recession.

Establish a $1 billion fund to provide federal support to housing trust funds established by state, county, and municipal governments. The rise in home prices over recent years, coupled with stagnant wages, has meant that people are committing an increasing share of their salaries to mortgage payments. Between 2001 and 2004, for example, the number of households paying more than half of their incomes on housing increased by 1.9 million. The Joint Center for Housing Studies estimates that housing is a "severe cost burden" for 15.6 million low- and middle-income households. Families facing such strains often forgo necessities. Other families simply forgo home ownership, or turn to high risk, alternative mortgage products. In order to encourage the development of affordable housing, Hillary will establish a $1 billion fund to support state, county, and municipal housing trust funds. Housing trust funds generally use dedicated funding sources to support initiatives like building subsidized rental housing and safety net housing, and they also support nonprofit housing developers. Hillary's fund will supplement the funding states, counties, and municipalities have already dedicated to these initiatives.

Again, she seeks to earmark $1Bil of other people’s money to throw at this problem. Public housing and rent control have both been disastrous in their own way. Adventures in public housing have included such fiascoes as Cabrini-Green in Chicago, and Pruitt-Igoe, in Saint Louis. She is offering up another helping of re-warmed Great Society Liberalism of the sort that her husband had to clean up after when he signed the welfare reform bill in 1996.

This legislation also presents a case where the devil is not merely ensconced in the details. The devil in this bill should stand out immediately to someone who isn’t on the warpath to have something for nothing. The bill rewards poor decision making at the expense of people who have been more patient and careful.

People like my wife and I, who have sat in high-rise apartments for the last 2.5 years as Northern Virginia real estate has fried ozone in the stratosphere, get doubly shafted by Clinton’s brilliant proposal. We first have to bail out all of these idiots, with the Webb and Moran bumper stickers on their Audi TTs, who took out balloon mortgages on glorified shacks. We then get the other end of the quarterstaff because these people are getting their payments subsidized by Uncle Sugar Daddy.

That subsidy means that the price reflects what the government will subsidize, not what the market will bear. That thing called the American Dream, it just went bye-bye. If you want to afford a house, ask the government nicely, and they will help. By subsidizing what marginal consumers can afford, the government doesn’t make housing more available. They make it more expensive.

Hillary Rodham Clinton’s proposed housing policy is truly the worst of both worlds. It subsidizes payments on dishonest junk mortgages with one hand, while robbing the middle-class taxpayer with the other. Oh, and in case you don’t want to live in a McMansion with an inflated price, and a welfare subsidy, she’ll build you lots of housing projects where you can live instead. I hope those projects aren’t the villages she thinks should be raising our kids.

I tend to cringe when I find myself agreeing with John Aravosis of Americablog on much of anything. However, his post comparing these risky mortgages to a high-stakes gamble was dead-on. Neither he nor I appreciate the fact that Hillary Rodham Clinton wants to subsidize poorly taken decisions at the expense of people more prudent.

Policies like these are not about helping the common man. They are about making us all more dependent and less in charge of our lives. Expensive housing is a problem; a problem that no one should want Hillary to pander to us on. Here, in Alexandria, VA, I’m doing my part.

Until the prices are reasonable enough so that a family with two successful wage earners doesn’t require financial prestidigitation to afford a house, we aren’t buying. A lack of sales will generally moderate a high price quite nicely. To solve the housing bubble, and its attendant mortgage crisis, tell the realtors, tell the mortgage bankers and tell Caligula Rodham Clinton all three “No Sale!”

[randita]

Economics 101.

When you make it possible for people to buy more housing than they can honestly afford, through either government subsidies or rent controls, you guarantee that there will be a housing shortage and that existing home prices will skyrocket.

A good book that more people should read:

[Pagey]

An “ANTI-Hillary” BTTT!

[Wally_Kalbacken]

It’s on issues like this that Rudy of Mitt will go through Hillary like a white hot buzz-saw through butter.