New Obama Housing Loan Policy: The Definition of Insanity?

Credit: Dreamstime

Albert Einstein reportedly once defined insanity as doing the same thing over and over again and expecting different results. From a front page article, "Wider Access to Loans Sought," in this morning's Washington Post:

The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery….

Say what?

For more background on how easy money housing loan policies promoted by the Federal government helped cause the Great Recession see Veronique de Rugy's, "The Truth About Fannie and Freddie's Role in the Housing Crisis," and Sheldon Richman's, "Clinton's Legacy: The Financial and Housing meltdown."

Comments

[Old Man With Candy]

SFX: palm slap to forehead

[Matrix]

I see they are taking Krugnuts advice again. Let's inflate that bubble again! Surely we'll get it right this time!

[mr simple]

Maybe he's just trying to cut off the asset bubble we're currently in.

[Palin's Buttplug]

Besides gold, which assets are in bubble?

Certainly you don't mean equities which are selling at near low P/E ratios.

[Restoras]

Derp.

[WhatAboutBob]

+1, PB provides a good laugh everyday for it's stupidity!

[mad libertarian guy]

And the reason gold is in a bubble, if it is in a bubble, is because it's compensating for the bubble bursting on VIRTUALLY EVERYTHING ELSE.

Gold can ONLY be as high as it is BECAUSE everything else took a shit. Currencies. Real Estate. Whole economies, all went to shit, and that is why gold is what it is.

[Pro Libertate]

Please, not again. People do not need houses. If they can afford them, great. If not, rent. Often, given the expenses involved, renting isn't all that much of an economic disadvantage, anyway, especially considering how few people actually stay put in a house.

I know there are those who like to pretend that the government had no hand in the last bubble, but that's complete nonsense. It amazes me that they'd try for round two.

[John]

You think we kid when we call leftism a religion. How is this any different than basing national health care policy on the search for the fountain of youth?

[Fatty Bolger]

Renting is much better for people with weak credit or who can't save enough for a down payment. If you can't come up with a down payment, how will you pay for repairs? If your landlord is a jerk and won't fix anything, you just move. If you can't afford repairs to your own house, it goes to shit, and you're stuck there.

[John]

Renting is also better for younger people since it allows them to be mobile. It is a lot easier to break a lease when you get a better job in a different town than sell a house.

[Pro Libertate]

Especially these days, when companies don't much want to foot the relo bill.

[Auric Demonocles]

Speak for yourself. If I decide I want to switch to our LA or Detroit offices and keep the same job they'll pay for it (up to every 2 years I think).

[Kaptious Kristen]

Tell me about it. I wouldn't be in DC if it wasn't for my dog-forsaken albatross condo

[John]

So is the pug still humping away his grief over the lost cat?

[Kaptious Kristen]

Yep - humped the shit out of it last night until the squeeze arrived. THen he settled down a bit.

[John]

At least he didn't hump the squeeze.

[Kaptious Kristen]

He's tried!

[Ron Bailey]

KK: My condo in DC has held its value (which says something terrible about the state of the Republic) and has in fact gone up. Just curious about yours?

[Kaptious Kristen]

Ron - I'm not in DC, I'm in an underdeveloped neighborhood in Alexandria (Fairfax County) in a 50-year-old complex with very high condo fees and centrally-controlled AC and heating. I've seen the value of my place halve after the bubble burst.

We're working on getting a developer in to take the land and build a new high-rise in exchange (we're on 20 acres right next to Metro).

[Auric Demonocles]

Also, stop trying to drive up prices. I am probably going to buy a house in 2-4 years. Don't screw me over by artificially increasing demand.

[Apatheist ?_??]

This. The housing "crash" (or rather the lowering of housing prices to what they should be) is great for young people looking to buy. I'm also sick of people asking why I still rent. Beyond the reasons given above we can also afford a much nicer apartment then we could a house. Whatever we could afford wouldn't come with a view and nice appliances.

[Red Rocks Rockin]

This is the point I constantly make. Deflation is only bad for people who over-leveraged themselves to begin with and were hoping the effects of inflation would water down all that stupid debt they took on.

Further deflation in the housing market would be positive for the economy, not negative, since more people would be able to afford to buy homes.

[HazelMeade]

Yes, but that would do nothing to prop up the banks, which after all need people to take out bigger mortages to make up for the low interest rates.

[mr simple]

But this time it's different because Obama actually cares and will make sure bad things don't happen. See?

[Palin's Buttplug]

There is no Countrywide or Washington Mutual around this time to write shitty loans and slough off risk.

[alexdroog]

http://www.youtube.com/watch?v=VhNsWjJM1SY

[Fatty Bolger]

DERP

[Ronny Paulino]

No possible way you actually believe what you are saying here.

[John]

No. He believes it. He is a retarded little monkey with a huge man crush on Obama.

[Palin's Buttplug]

WaMu was the largest bank failure in US history - mainly because they made a practice of writing shitty loans.

Banks like USB or PNC refused to write those option ARM, subprime loans and flourished in the meltdown.

[John]

And

The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit,

Doesn't mean making shitty loans how? Just what makes a shitty loan if not weak credit? How do you remember to breath?

[Palin's Buttplug]

So he is "pushing" the banks nicely?

Bush actually GAVE first time homebuyers $10,000 for their downpayment.

http://www.govtrack.us/congress/bills/108/s811

[John]

Pushing banks to make loans to people with weak credit. That is pushing them to make bad loans.

And if you are going to force banks to make loans to people who can't or won't pay the money back, giving them some money to pay back is as good as anything. You are losing all of the money anyway.

Sorry retard "Bushpig" is still not an argument.

[Restoras]

I had no idea Bush was still president. Is our executive branch like ancient Rome, with two pro consuls?

[Pro Libertate]

Two consuls. Proconsuls were the guys who ran the provinces.

[Rights-Minimalist Autocrat]

Also, I had no idea I approved of it when Bush did it.

[bmp1701]

He's still advocating the same moronic policy of pumping up a housing bubble.

[Mick Kraut]

Ronny,

As a long suffering Pirates fan, your name chills me to the core...

[Ronny Paulino]

Ron Paul and Ronny Paulino both crush lefties.

[Mick Kraut]

Just dont ask either to hustle on the basepaths...

[phandaal]

The sheer amount of stupid packed in to such a small amount of words is mind-boggling.

[Red Rocks Rockin]

How else would we recognize him?

[CatoTheElder]

You are aware that the Fannie Mae Foundation honored Countrywide with its "Outstanding Achievement" award.

In Fannie Mae's words of praise for Countrywide:
"Because Fannie Mae and Freddie Mac tend to give their best lenders access to the most flexible underwriting criteria, Countrywide benefits from its status as one of the largest originators of mortgage loans and one of the largest participants in the GSE programs. ? When necessary?in cases where applicants have no established credit history, for example?Countrywide uses nontraditional credit, a practice now accepted by the GSEs."

Countrywide was doing precisely what Fannie Mae wanted, and Fannie Mae was doing precisely what Barney Frank, Chris Dodd and George Bush wanted.

[Scarcity]

Well there you go Cato, you hung yourself in the last sentence. Bush did it too so now you have to shut up and like it.

Because fried chicken.

[DesigNate]

Didn't the government basically force WaMu to shut down? I thought I remember them doing something that royally screwed them over while simultaneously helping BoA or WF.

[DaveAnthony]

And yet FNMA is still there guaranteeing 90% of all mortgages!

Countrywide and WaMu are gone, but the incentive to do what Countrywide and WaMu did? Still there.

Also, DERP.

[EternalOptimist]

This is a perfect example of the left trying to give people what they want, even when they are not even asking for it!

[WC Varones]

Reason imitates Varones.

Obama: banks should make more bad housing loans to deadbeats washingtonpost.com/business/econo? #definitionofinsanity

? W.C. Varones (@wcvarones) April 3, 2013

[removed][removed]

[Rights-Minimalist Autocrat]

Rights-Minimalist Autocrat thinks that was everyone's first reaction.

[The Late P Brooks]

At least we still have Ally Zombie GMAC to kick around.

[HazelMeade]

Here's a fairly straightforward way to boost the housing market: Allow people to withdraw money from their 401(k) plans tax free to make a down payment on a house.

[Citizen Nothing]

I could be ready tomorrow to transform my 401K into a nice, paid-up beachfront vacation home. Come on, feds! Stimulus! Wadda ya waitin' for?

[NeonCat]

I can already feel myself insuring your beachfront property.

[DesigNate]

Leave it to shrike to come in and spout off some insanely retarded bullshit.

[NeonCat]

You're just mad because you're a Christfag wingnut Republican who knows Booosh! will never return your man-crush. How dare you slight Shrike! He took a TEST. It said he was LIBERTARIAN. That is all you know and all you need to know.

[DesigNate]

So I read an article yesterday that Architecture is the #1 dead end degree to get right now. Luckily I graduated 2 years ago and had been working in my current job for 8. But they sited the housing bubble as the cause and I was like: "That is fucking retarded."

First of all, most housing isn't designed by architects. It's designed by some drafter from ITT that DR Horton hired at 20/hour to come up with some plans.

Secondly, it was the financial metldown that caused architect's woes. A housing market crash on it's own would suck, but it's fucking hard to build a project when the banks refuse to give loans (unless you've got that kind of money lying around).

You would think they would learn their lesson, but obviously Mr. President still owes his banking friends on Wall Street or he wouldn't be pushing such retarded ass shit.

[BigFire]

Barack Obama's one private sector job is to get unqualified people home loans. It's really all he knows about the private sector.

[The Late P Brooks]

most housing isn't designed by architects. It's designed by some drafter from ITT that DR Horton hired at 20/hour to come up with some plans.

Wait, what?

[DesigNate]

Okay, that might have been a bit of hyperbole.

Most states though allow builders and even homeowners to design their own residences (builders usually have a cap of like 3 or something) nttawwt. Sometimes architects do design a single family home. The big builders routinely hire cheep drafting/design labor and might have one architect on staff to sign off on the plans if a particular city requires that (a lot don't).

Most architects work in the commercial sector cause that's where the "real" money is.

[Isaac Bartram]

Since Hurricane Andrew, all new houses and renovations to existing ones in Florida require a set of plans signed by a RA and structural plans signed by PE, even though all structural elements in single family dwelling (except things like roof trusses) can be "handbooked from the building code.

The problem with the losses from Andrew wasn't inadequacy of the building code, it was due to inadequate inspection and enforcement of it.

[DesigNate]

I didn't know that about Florida. I'm surprised Texas hasn't pushed something like that between hurricanes and tornadoes.

[Isaac Bartram]

Please, not again. People do not need houses. If they can afford them, great. If not, rent. Often, given the expenses involved, renting isn't all that much of an economic disadvantage, anyway, especially considering how few people actually stay put in a house.

Buying rental property also used to be a vehicle for frugal members of the working class to build wealth and escape the near poverty level standard of living they had.

Whether it was buying a big single family home and dividing it into flats (not allowed nearly everywhere now) or buying a duplex or triplex and renting out the extra apartments people once rose to earn incomes far beyond their modest beginnings.

Snob zoning and the home ownership fetish has made being a landlord pretty much restricted to connected big developers.

[The Late P Brooks]

that might have been a bit of hyperbole.

Actually, I find it completely believable.

Especially since ITT presumably teaches how to use the standard tables which tell you how big the joists need to be for your span.

[broody]

Very good loan rules for common man. Recently the government has provided some ease of the rural mortgage loans, and guess the ease is also creating impact on the private money lender companies. The borrowers will have huge flexibility on getting inspiring funds for mortgage loans .