Yesterday’s Reno Gazette-Journal front page shouted: “Mortgage industry pressed.” Turns out that the geniuses at the White House say the at-risk borrowers aren’t getting enough help. So, what are they going to do? Well, by golly, starting this week they are sending “three-person SWAT teams” to monitor the eight largest companies’ work and requesting ”twice-daily” reports on their progress!
OK, let’s say your 10 AM report shows that you are working on 10 Home Affordable Modification Program mortgages and that 8 of those HAMPs have potential. At your 3 PM meeting with the local SWAT team unfortunately 2 of the 8 potential HAMPs failed to make the third payment, or better yet, failed to get the paper work complete. Will the SWAT team then take out its SWAT weapons?
And what has the SWAT team done between the two meetings? How much of our money will the SWAT team receive in compensation for their hazardous duty on the team? Are they new hires, if not, what would they otherwise be doing? And, is that necessary?!
Finally, what is the purpose of all this? According to yesterday’s WSJ, HAMP would be a success if a large portion of trial mortgages in relief qualify for the permanent principal reduction and if the re-default rate on modified mortgages remains low. If HAMP fails, particularly because of the lenders-fearing the SWAT teams-become lax in approving the deals, it could still leave a large number of underwater mortgages ticking in the system! Sound familiar?
I can hear Barney Frank saying, “I want to roll the dice” on Fannie and Freddie!
But never fear at the other end of the spectrum the FHA which ostensibly wants tougher rules on mortgage lenders is propping up loans and extending its support of traditional real estate to upper-class buyers, that would be buyers in Speaker Pelosi’s own San Francisco. Those poor entitled liberals had no FHA supported loans two years ago, now the government is guaranteeing six mortgages a week!
And this largess even surprised its beneficiaries: Mike Rowland a 27-year old who with friends bought a million dollar duplex with little money down said, “It was kind of crazy we could get this big a loan!” Crazy…indeed!
John Stossel, a brilliant columnist at Real Clear Politics nails it in today’s post, Stop Insuring Mortgages. “Home ownership, all else equal, is a good thing. But when government lumbers into the market and subsidizes folly, that’s a very bad thing.” Seems we’re stuck with “very bad.” Japan was too, for the “lost decade!”
To cap things off, today’s WSJ reports that the FHA is short of capital and is looking for ways to boost reserves!
You know, it’s OK if Barney Frank wants to gamble with his own money, but in fact he’s gambling with yours! Taxpayers, get your checkbooks out…oh, and tell your great-grandchildren to get theirs out as well!
Tom Motherway