Well, since home ownership allegedly supports conservative political attitudes, then I guess Leftists should be supportive of all efforts to end subsidizations of home ownership.
David Shemano --- Original Message--- To: Activists and scholars in Marxist tradition <[email protected]>, Progressive Economics <[email protected]> From: Louis Proyect <[email protected]> Sent: 2/12/2011 6:41AM Subject: [Pen-l] Obama administration seeks end to middle-class home ownership >> NY Times February 11, 2011 >> Administration Calls for Cutting Aid to Home Buyers >> By BINYAMIN APPELBAUM >> >> WASHINGTON The Obama administrations much-anticipated report on >> redesigning the governments role in housing finance, published Friday, >> is not solely a proposal to dissolve the unpopular finance companies >> Fannie Mae and Freddie Mac. >> >> It is also a more audacious call for the federal government to cut back >> its broadly popular, long-running campaign to help Americans own homes. >> The three ideas that the report outlines for replacing Fannie and >> Freddie all would raise the cost of mortgage loans and push >> homeownership beyond the reach of some families. >> >> That fact is already generating opposition in Congress and among groups >> like community banks and consumer advocates. >> >> But administration officials said they had concluded the country could >> no longer afford to sustain its commitment to minting homeowners. Better >> to help some people rent. >> >> Federal programs subsidized nine in 10 mortgage loans made last year. If >> the Obama administration succeeds, that could plummet to a mere one in >> 10 loans by the end of the decade. >> >> The government must help to ensure that all Americans have access to >> quality housing that they can afford, the report said. This does not >> mean our goal is for all Americans to be homeowners. >> >> In announcing its blueprint, the administration offered a series of >> options for lawmakers to consider. But as a starting point its ideas >> pleased and surprised business interests and advocates of smaller >> government that have long opposed the governments presence in the >> mortgage market. >> >> Im encouraged to see the administration included a number of reform >> ideas that track closely with my own, said Representative Scott >> Garrett, the New Jersey Republican who heads the subcommittee that >> oversees Fannie and Freddie. >> >> Some of the White Houses usual allies, meanwhile, reacted with anger. >> Gutting Fannie and Freddie is the most irresponsible housing proposal >> yet from this administration, said Representative Dennis Cardoza, a >> Democrat from the Central Valley in California. How is Joe Six-Pack >> ever going to be able to afford a home? >> >> The government built Fannie and Freddie as giant magnets to gather money >> for mortgage loans, part of an effort that dates to the Great Depression >> to foster homeownership. >> >> The companies attract investors by promising repayment, even if >> borrowers default. In exchange, investors accept relatively low interest >> rates. That lets Fannie and Freddie provide money to mortgage lenders at >> relatively low cost, which lets borrowers pay relatively low interest rates. >> >> A long line of presidents have celebrated the success of the two >> companies in increasing the share of American families that own their homes. >> >> But the system works only because taxpayers ultimately are liable. In >> 2008, the government seized the companies. It has since spent more than >> $135 billion honoring their guarantees. >> >> The Obama administration plans to put the companies out of business by >> gradually reducing the value of loans they can guarantee and raising the >> prices they charge lenders. It also plans to require larger down >> payments from borrowers. >> >> The Treasury secretary, Timothy F. Geithner, said Friday at the >> Brookings Institution that the health of the housing market would >> dictate the rate of the agencies closing. He estimated the process >> could take five to seven years. >> >> We are going to start the process of reform now, but we are going to do >> it responsibly and carefully so that we support the recovery and the >> process of repair of the housing market, he said in a separate statement. >> >> If the companies disappear, investors will demand that borrowers pay >> higher interest rates. But there is wide-ranging disagreement about how >> much higher. Estimates range from less than half a percentage point to >> several percentage points. >> >> Investors also may be reluctant to provide money for 30-year fixed-rate >> mortgages, a product that has never existed without government support. >> >> The effect on borrowers depends in part on what the government does instead. >> >> The report sketches three options without offering specifics or picking >> a favorite. The administration took a similar approach to health care >> legislation, adopting the role of moderator as Congress worked out the >> particulars. >> >> The first option would eliminate any government guarantee for >> middle-class mortgages. >> >> Under the second option, the government would offer guarantees to >> investors mostly in times of financial distress, preserving a steady >> supply of loans but not reducing interest rates in good times. >> >> The third option comes nearest to the current system. The government >> still would guarantee a broad range of mortgages, but only if lenders >> first purchased a guarantee from a private insurer. That would limit the >> governments exposure but also the effect on interest rates. >> >> The report rejects calls from some conservatives to eliminate federal >> programs that guarantee mortgages for lower-income families, veterans >> and farmers. However, it said it would like those programs the largest >> of which is the Federal Housing Administration to guarantee no more >> than 15 percent of mortgages, down from a current level of about 30 percent. >> >> We do take the view that it would be fundamentally untenable for the >> country to adopt a model where the government plays no role, Mr. >> Geithner said. >> >> The report, prepared by Treasury and the Department of Housing and Urban >> Development, also notes that policies like allowing homeowners to deduct >> mortgage interest payments from taxable income an expensive pillar of >> the governments housing campaign encourage people to invest in >> housing rather than other parts of the economy, and deserve to be >> reconsidered. >> >> The role that federal home ownership policies played in the housing >> crisis, and particularly the role of Fannie and Freddie, is deeply >> controversial. >> >> Some conservative scholars say that the companies fueled the crisis by >> financing vast numbers of unaffordable loans. A larger number of >> scholars say that Fannie and Freddie chased after the bad behavior of >> other lenders to reclaim market share, and that their acquisition of bad >> loans while saddling taxpayers with huge losses was not a primary >> cause of the crisis. >> >> Many advocates for affordable housing say they cannot understand why the >> administration has concluded that those errors in judgment are more >> important than the long-term success of the two companies in making >> homeownership more affordable. >> >> Instead of cleaning up where Fannie and Freddie went wrong, were >> eradicating a proven system that worked very well for most of its >> history, said John Taylor, president of the National Community >> Reinvestment Coalition. For those who are working their way up the >> economic ladder, there is going to be a narrower opportunity for them to >> enter homeownership. >> >> Sewell Chan contributed reporting. >> _______________________________________________ >> pen-l mailing list >> [email protected] >> https://lists.csuchico.edu/mailman/listinfo/pen-l >> >>
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