Joe Biden is heading the United States into another real estate market crash. You may or may not remember how easy lending during the Carter and Clinton administrations led to a market crash as home loans began to default at an alarming rate. Not surprising when you consider Andrew Cuomo was the HUD director under Clinton.
They prodded banks into making questionable loans that led to the real estate collapse in 2007.
The US Supreme Court gave the okay for Biden to fire the head of the Federal Housing Finance Agency. He wasted no time in doing that and top Democrats are urging Biden to name a replacement soon. They want to make it easier to get a home mortgage loan.
The problem is, they don’t make it easier to make the payments on those homes.
You may remember how Fannie Mae and Freddie MAC needed huge infusions of cash after making an inordinate number of risky home loans. Both organizations nearly went under. Now, Democrats want to do the same thing. They forget how millions of people lost everything after they could no longer afford their mortgages. This led to The Great Recession. Democrats never learn.
Sen. Pat Toomey of Pennsylvania said:
“Our housing finance system remains in urgent need of reform. I look forward to working with the next FHFA director to enact legislation that finally addresses the flaws in the structure of the housing finance system, ends the conservatorships, and protects taxpayers against future bailouts.”
The Democrats now want to restore the power to make high-risk home loans through Fannie Mae and Freddie Mac. This would be a recipe for disaster. The government would ultimately be the one to bail out the housing market once again.
Dworkin and other housing advocates want FHFA to allow Fannie and Freddie to take on more financial risk — meaning more government intervention backed by taxpayers — in the name of expanding access to mortgages.
Among their ideas: Giving Fannie and Freddie free rein to purchase mortgages with lower credit scores, allowing private lenders to make more of those loans; cutting fees; and expanding investment that supports the construction of multifamily rental properties.
Advocates want FHFA to immediately do away with Trump-era limits on Fannie and Freddie’s purchases of “high-risk” loans — characterized as having some combination of low credit scores and high debt-to-income or loan-to-value ratios.
