newYou can listen to the Fox News article!
Washington politicians have such poor memories that they make the same mistakes over and over again.
It was only 17 years ago that the “subprime” mortgage crisis wreaked havoc on the economy and plunged financial markets into the biggest turmoil since the Great Depression. Millions of Americans lost their jobs. One of the sparks that ignited that fire was Freddie Mac and its sister company, Fannie Mae, which offered generous taxpayer-backed mortgage insurance to risky borrowers who took out loans with low down payments.
It all blew up in the taxpayers’ faces, even though experts in Washington had said there was less than a one in a thousand chance that these mortgages would default and that taxpayers would lose out.
The biggest taxpayer bailouts went not to Wall Street banks or investment firms, but to Fannie Mae and Freddie Mac.
It’s back. The Biden administration’s latest plan is to encourage families to borrow more money by using the equity in their homes as collateral. Home equity loans are often very risky; if prices fall, the home’s equity can go negative. Home equity, with nearly $18 trillion in value, is one of the largest sources of savings and ownership for American families.
Now the Biden administration is trying to encourage Americans to borrow even more at a time when credit card and auto debt are at record highs. If home prices fall, households may find it harder to pay their mortgages and may default, as they did during the subprime crisis.
Most homeowners would rather renovate their home than buy another: survey
As the Wall Street Journal points out, “other people who may be affected” by this scam are taxpayers. The evidence is indisputable: since 2008, most of the mortgages that have gone into default have been loans with small down payments or low equity.
Why would President Joe Biden want to go down this dangerous path again?
The obvious answer is that Biden wants to “stimulate” spending by putting more cash in the hands of consumers so they can rush to spend before the election. They think this could be a plan to provide extra cash to homeowners at a time when Americans should be saving and paying down debt, not spending.
Bank of America believes the fraud could result in $1.8 trillion in government-backed mortgages, a homeowners’ version of a student loan forgiveness program.
Click here to read more FOX News Opinion
Here’s another problem: Fannie Mae and Freddie Mac were created to promote homeownership, not to increase government spending. Mortgages have the opposite effect by reducing homeownership for families. In other words, the Biden administration is now encouraging Americans to own less home.
Talk about mission creep.
The natural question is, how does this benefit taxpayers or the country?
It is different.
Almost comically, the Biden Administration is promising not to cost taxpayers a penny. Oh, right. Just like Fannie and Freddie don’t need a bailout. But then, whoops. Suddenly, in 2008, they need $200 billion.
Click here to get the FOX News app
This is happening at a time when Fannie and Freddie are currently insuring $1 million homes. Many first-time home buyers People starting out with $1 million homes. This is simply an increase in taxpayer debt and a boon to the housing industry.
Washington is currently awash in debt, and Biden believes America needs to borrow even more. There must be a cheaper way to buy an election.
Click here to read more Stephen Moore
