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Biden Housing Scheme Could Ignite Another 2008 Mortgage Crisis

Posted on Tuesday, June 11, 2024
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by Outside Contributor
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Politicians in Washington have very short memories, so they repeat the same mistakes over and over.

It was only 17 years ago that the “subprime” mortgage crisis torpedoed the economy and sent the financial markets into the biggest tailspin since the Great Depression. Millions of Americans lost their jobs. One of the matches that lit that bonfire was Freddie Mac and its cousin, Fannie Mae, offering generous, taxpayer-guaranteed mortgage insurance to risky borrowers on loans with low down payments.

It all blew up in the faces of the taxpayers even though the Washington experts said the chances of these mortgages going bust and taxpayers taking a loss was less than one in a thousand.

The biggest taxpayer bailouts went not to the Wall Street banks and investment companies but to Fannie and Freddie.

Here we go again. The latest scheme by the Biden administration is to encourage families to borrow more money by using the equity in their home as collateral. Home equity loans are often very risky. If prices fall, home equity can become negative. There is nearly $18 trillion in home equity, and it’s one of the largest sources of savings and ownership for American families.

Now the Biden administration wants to encourage Americans to borrow even more at a time when credit card and auto debts are at an all-time high. If homes fall in value, families could slip underwater and default — just like during the subprime crisis.

As The Wall Street Journal points out, the other “likely losers” from this scam “would be taxpayers.” The evidence is indisputable from 2008 that the mortgages that ended in default were low-down-payment and low-equity loans.

Why in the world would President Joe Biden want to go down this dangerous road again?

The obvious answer is that Biden wants to “stimulate” spending by putting more cash into the hands of consumers so they can rush and spend it before the election. They think this could be a plan that would provide extra wads of cash to homeowners at a time when Americans need to be saving and paying down debts, not spending.

The Bank of America believes this scam could result in $1.8 trillion in government-insured home equity loans. This is the homeowner equivalent of the student loan forgiveness program.

There’s another problem here. Fannie Mae and Freddie Mac were created to promote home ownership, not to juice government spending. A home equity loan achieves the opposite by depleting a family’s ownership stake in a home. In other words, we now have the Biden administration encouraging Americans to have LESS home ownership.

Talk about mission creep.

The obvious question is: How in the world is this in the interests of taxpayers or the country?

It isn’t.

Almost comically, the Biden administration pledges this won’t cost taxpayers a penny. Uh huh. Just like Fannie and Freddie would never need a bailout. But oops. Then suddenly they needed some $200 billion in 2008.

This also is happening at a time when Fannie and Freddie are now insuring million-dollar homes. We don’t know many first-time homebuyers who start with a $1 million home. This is simply more debt overhang for taxpayers and a giveaway to the housing industry.

Washington is awash in debt right now, and Biden thinks America needs more of it. There must be a cheaper way to buy an election.

Stephen Moore is a visiting fellow at the Heritage Foundation and a senior economic advisor to Donald Trump. His latest book is: “Govzilla: How the Relentless Growth of Government Is Devouring Our Economy.”

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Max
Max
8 days ago

This is just another part of the agenda to finish destroying this nation. What is sad is that there will be ignorant people to take out these types of loans and not realize the consequences until it is too late.

Robert Zuccaro
Robert Zuccaro
8 days ago

The real story is what HASN’T Bidenomics made WORSE for average Americans?

Dan W.
Dan W.
8 days ago

In other news, Hunter Biden has been found guilty on all three gun counts. Up next, Hunter Biden’s income tax trial.

FedUp
FedUp
8 days ago

I’ve made a list of all the good things Biden has done for our country.
1)
I got nothing.

Lhett
Lhett
8 days ago

The upcoming foreclosures will provide vacant houses for the illegal immigrants.

Kdsq
Kdsq
8 days ago

There is no bigger buffoon in dc than bite me. He’s always been an idiot and a crook. Now with his dementia we have all these little communists in his coup admin running things and destroying our country. I did the HE loan once, and vowed never again. It took me five years to catch up. Worst thing one can do, unless of course one needs the money to actually survive.

Jeri
Jeri
8 days ago

Sadly, way too many Americans have very short memories and need to go to the school knocks several times before they understand. You would think one crash and burn would be enough.

Brenda G
Brenda G
8 days ago

I just hope that he is stopped somehow. Are the remaining politicians that stupid?

Melinda
Melinda
8 days ago

I remember the market and housing crash in ’09. I lost half of my investment portfolio. It has come back but still not all the way. These things are devastating and makes me leary of using investments to replace social security. Too many politicians have no financial acumen.

John
John
8 days ago

Just one more crisis looming on the horizon. The only way for the Totalitarian Communist Democrat party regime to steal another election is to create some type of crisis.
Hold on to your pants because it going to be a bumpy ride and I suspect they will institute Martial law or or some type of lock down mandate. Maybe even bring in UN troops to guell the problems they created in the first place.
Stay vigilant and safe, plus some prayers wouldn’t hurt either.

Keith Kirkwood
Keith Kirkwood
7 days ago

People have to be responsible for their own
finances , being strapped in debt from a mortgage
already, then borrowing against the possible
equity will end up in financial ruin. Whatever happened to living within you means ?

Mike
Mike
7 days ago

145 more days

fpatriot
fpatriot
6 days ago

Yet another stupid election fraud scheme by Bidumb to get more votes. This could result in a another recession or worse and huge losses for all Americans. Housing is way overpriced and those prices are now poised to drop. When they do, everybody will lose large amounts of money, it has happened again and again. Everything Bidumb does is for Bidumb not for America.

Brenda G
Brenda G
6 days ago

They’ve Not forgotten. They are conveniently ignoring what is obvious, obvious of the screw ups.Selfish, narcissistic public servants. We aren’t ignorant like so many of these individuals, just intimidated and need to realize that our own successes and safety are in our very capable hands.

Taz
Taz
7 days ago

Just remember, what the Democrats do and say has the exact opposite of their intended affect. Happens every time!

Kim
Kim
7 days ago

Everything biden will do during the run-up to the November election is designed to fool Americans into believing they’re not as bad off as they were when President Trump left office. If you’re foolish, you might fall for this chicanery. If you’re smart, you’ll recognize the ploy. Putting more “cash” into our hands without the means to pay back loans is a recipe for disaster. Haven’t they learned anything from the mortgage meltdown and The Great Recession?

Every time the government comes out with the quarterly GDP or the monthly unemployment rate, it’s always revised downward. The unemployment rate is now 4% and has been rising for months. Something’s gotta give, as this economy can’t support the meteoric rise in the cost of unskilled labor and millions staying out of the job market. The rise in interest rates makes everything worse, including the debt the federal government is responsible for. And the debt clock ticks louder…check out real-time data at US debt clock.

MAGA.

Pete
Pete
7 days ago

i drive a transit bus, so I see people walking the streets that are victims of our govt mismanagement.

TOBS
TOBS
7 days ago

LETS GO BRANDON!

Avoter
Avoter
7 days ago

It never changes. Always the democrats come up with some scheme they claim will make things better and always it backfires on us but not them. AI does not stand for Artificial Intelligence, it stands for 2 things “Artificially Intelligent” and also “Arrogant Ignorance”. I think those of us with “Real Intelligence” or RI can deduce what I mean by those.

Jeanette
Jeanette
7 days ago

cheaper ways, maybe, but that’s never been this administration’s concern! “Safer” isn’t in their vocabulary, I don’t think, when it comes to economics and debt, that there’s quite a few not-understoods as well. Just look at our “great” economy”! So sick of this stupidity and intentional misrepresentation! We’ve got to get them out of office before they completely destroy this economy and country. MAGA

Bfherb
Bfherb
7 days ago

Maybe Sleepy Joe should stop writing all the checks to all the countries that will never pay us back. He should worry about what nursing home he will be going to.

Kyle Buy you some guns,and learn how to shoot
Kyle Buy you some guns,and learn how to shoot
7 days ago

rEMEMBER THE PEASENTSWITH THEIR WOODEN HOE’S AND RAKES IN fRANKINSTEIN. kYLE l.

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