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You Know I'm Right | Commentary by Betty Arenson
| Friday, Oct 18, 2013

bettyarensonIt’s a safe bet to say there isn’t one governmental official who knows, let alone one who would tell taxpayers, how much the mortgage crisis-bailout sham has cost Americans. In a quest to find out, I quickly found a circuitous path that repeatedly led to one more boondoggle. (“Boondoggle” is the wasteland where the government takes our money in the name of helping us.)

If you thought the total was (just) the stimulus money with the title of too-big-to-fail groups, then you are as naive as I was.

Trying to follow the money trail to get a true sum total seems impossible.

Bloomberg News reported in June 2012 that Bank of America alone had suffered more than $40 billion in the mortgage and foreclosure mess.

Billions of dollars have been taken from taxpayers for years to prop up the poorly run Fannie Mae and Freddie Mac mortgage funding entities. These two Government Sponsored Enterprises (GSEs) were so pathetic in their operations, they were placed into conservatorship by the U.S. Treasury Department in September 2008. They are now run by the Federal Housing Finance Agency (FHFA).

The FHFA was born out of a new law called the Economic Recovery Act of 2008. The Act gave the FHFA the authority to manage the country’s secondary mortgage markets of Fannie, Freddie and the Federal Home Loan banks. To us bystanders, it would seem the feds could see that those three entities (all GSEs) were dismally functioning.  Therefore, bureaucrats did what they do best: They created a new law and a new federal government department.

It’s laughable that the mission of the FHFA boondoggle is “to provide effective supervision, regulation and housing mission oversight of Fannie Mae, Freddie Mac and the Federal Home Loan banks to promote their safety and soundness, support housing finance and affordable housing, and support a stable and liquid mortgage market.” They call the necessary oversight “imperative.”

The FHFA is not to be confused with the FHA, the Federal Housing Authority. That entity began in 1934 to help veterans, then in 1965 was made part of the Department of Housing and Urban Development’s Office of Housing.

In case you aren’t yet dizzy, there is also an Office of Federal Housing Enterprise Oversight (OFHEO), the Federal Housing Finance Board (FHFB) and a GSE mission office.

In total, there are 14 housing-related GSEs.  I have no doubt each one is well-staffed with federal government employees.

By June 2012, the New York Times placed the Fannie-Freddie bailouts at $145.9 billion and rising, while the Congressional Budget Office predicted a tab of up to $389 billion. Other analysts said $1 trillion.

My curiosity was jostled after reading an Oct. 8, 2013, article from theguardian.com entitled, “Too Many Americans Are in Homes They Can’t Afford.”

Many of us knew about the bailouts of banks, mortgage lenders, etc., then ditto for Fannie and Freddie. But now, for the first time in the history of the FHA, it’s asking for $1.7 billion taxpayer dollars.

You can bet this is indeed just the first asking.

The original 1934 National Housing Act required the FHA to assure that loans would not be made to those who could not meet their “reasonable ability to pay.” This resulted in homeowners having almost 30 percent equity in their homes after four years.

In the late 1950s, old loan polices were tossed and efforts were robust to lure people into homes they could not afford – especially in geographical areas of low-moderate income.

Coupled with the historical facts that the federal government cannot manage anything effectively or prudently because the taxpayer pocket is believed to have no bottom, the Guardian article points out that the FHA continues to guarantee loans for people who simply cannot afford the homes they are in.

With the discarding of original, sapient loan guidelines, such things as FICO scores, debt-to-income levels, reasonable down payments, etc., became of little or no consideration.

When I hear conservatives bashed and the Tea Party stance demeaned and ridiculed by those who think only the “government” can do anything and everything, I would enjoy hearing the misguided bullies and tormentors explaining the reasons for the existence of 14 failing GSEs and the irresponsibility of unfettered money handouts to the incapable.

Just when taxpayers thought the trillions of dollars spent because of bureaucrat recklessness was behind us, we’re now being tapped for more in the form of $1.7 billion to the FHA.

Since prudent and reasonable guidelines for loans still do not exit and no one is presenting them, we can only expect more bailouts.

This is just one more thing to consider when we hear about the “extreme right wing” that’s trying to rein in government spending, federal budgets, debt ceilings, soon to be nearly $18 trillion of debt and the fact that the feds borrow more than 40 cents of every dollar that we must pay interest on.

For you responsible borrowers and homeowners who pay your mortgage timely or have paid off your home responsibly, you have also paid and are continue to pay for those who knowingly put themselves into devil-may-care situations – situations that the responsible among us will sacrifice to finance.

 

Betty Arenson has lived in the SCV since 1968 and describes herself as a conservative who’s concerned about progressives’ politics and their impacts on the country, her children, grandchildren and great-grandchildren. She says she is unashamed to own a gun or a Bible, couldn’t care less about the color of the president’s skin, and demands that he uphold his oath to protect and follow the Constitution of the United States in its entirety. Her commentary publishes Fridays.

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2 Comments

  1. Guest says:

    Just pointing out that your commentary is flawed.

    First: “In total, there are 14 housing-related GSEs. I have no doubt each one is well-staffed with federal government employees.”

    This is false; the GSE employees are NOT employees of the federal government.

    Second: “I would enjoy hearing the misguided bullies and tormentors explaining the reasons for the existence of 14 failing GSEs and the irresponsibility of unfettered money handouts to the incapable.”
    It is unfair to include the Federal Home Loan Banks in your generalization. These entities do not solicit handouts, and actually have been performing well financially, if you bothered to look at their public filings.

  2. SCVMom58 says:

    You did a true and honest write up in my opinion. Too many Democrats (Liberals) live in a world of deniel which is what is destroying our great nation for generations to come. Only question is, when will they stop drinking the tainted kool-aid the white house has been servin and get wise.

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