In the first several years of the 21st century, federal policies encouraging banks to grant mortgages to borrowers who couldn't repay them, government purchases of mortgage-backed securities, and other housing-market interventions led to skyrocketing housing prices and record consumer debt, precipitating the 2008 crash.
The Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, the same government-sponsored corporations that played a major role in the 2008 crash, are behind much of the current mischief in the housing market.
"The new Fannie and Freddie mortgage pricing directive raised rates on low-risk borrowers and reduced them on high-risk borrowers," Jason Sorens, senior research fellow at the American Institute of Economic Research, told the Daily Caller.
"Around $190 billion of the increase in the first quarter," notes the Daily Caller, "Was in mortgage debt." "The reality is that you have to look at Fannie, Freddie and FHA as one big entity, its [sic] government mortgage: it's all run by the government, and as a single entity, it's tilting towards higher-risk loans and higher debt ratios," Edward Pinto, senior fellow and co-director of the American Enterprise Institute's Housing Center, told the website.
"You can't have the housing finance system without foreclosure," but "These forbearance programs are, in effect, eliminating any ability to foreclose." With no possibility of foreclosure, why should borrowers pay anything at all? Why not simply wait for the president to declare mortgage forgiveness, as he has repeatedly tried to do with student loans? The administration is also wooing renters by suggesting a nationwide rent-control scheme, a plan first floated by the White House in January 2023.
"The most dangerous FHFA proposal is a rule that would enshrine a 'tenants' bill of rights' capping rents as a share of household income, providing free legal representation to tenants, and more, on any property financed by a Fannie or Freddie-backed mortgage," Sorens told the Daily Caller.
"As a result, the government mortgage guarantors could lose a lot of money. One major New York mortgage lender has already suffered credit downgrades and an investor bailout as a result of the tightening of rent control there." None of this, of course, matters to President Joe Biden and those in his employ.
https://thenewamerican.com/us/bidens-housing-policies-may-be-setting-the-stage-for-another-crash/
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