If you thought Hillary Clinton’s health care takeover plan was bad, wait ’til you see what she has in store for the housing sector. As always with the Clintons, the market is the problem and Big Nanny (and Big Fannie and Big Freddie) are the solution. Last week, she unveiled her “four-point plan” to protect the American Dream of homeownership. She’s wildly waving around $1 billion promises here and $1 billion promises there. Look out:
In her address to about 250 people in a Derry elementary school gymnasium, Clinton criticized unscrupulous mortgage brokers who push customers into borrowing more to pad their commission or are dishonest about the true cost of the loan. To help curb the number of foreclosures, Clinton proposed setting up a $1 billion fund to assist homeowners in making arrangements with lending companies to stay in their home.
She also discussed the lack of affordable housing, an issue that is particularly a problem in New England. To promote more affordable housing construction, Clinton proposed another $1 billion fund which would be distributed to state, county and local affordable housing programs.
The full plan is at her campaign blog, where she’s soliciting personal stories of homeowners “at risk.” Guess she’s tired of hearing John Edwards trot out his health care victim James Lowe anecdotes. Hillary wants her own homeowner victim James Lowe:
Hillary appeared on CNBC last week to pimp her plan. Unsurprisingly, she’s demonizing lenders and brokers the way she demonized the pharmaceutical industry:
“I think a lot of the lenders have really taken advantage of what is a really tough economic situation for many Americans,” Clinton told CNBC’s Dylan Ratigan during the live interview. “Although many of us have done well in the last six-and-half years, the median income in America has dropped $1,300, while healthcare costs, tuition and other costs that are really part of a middle class and working family’s budget have increased.”
In order to ensure mortgage brokers are qualified, she also thinks there should be more screening and a national registry of brokers as well as greater disclosure of the terms of broker compensation.
Clinton also proposed a $1 billion federal fund for local and state programs that help at-risk homeowners avoid foreclosures. She said those programs could help the “unsuspecting families” linked to unfair mortgages.
She also proposed that lenders remove early payment penalties attached to some mortgages.
“A lot of buyers think the brokers are actually representing them, when we know the brokers get paid depending upon the size of the mortgage they are able to sell,” she said.
For a salty, detailed smackdown of the CNBC interview, see this mortgage specialist’s blog. Read the whole thing, but here’s his bottom line:
People need to be fiscally smarter, think for themselves, and not run with the herd. There is nothing that can be done to support property values where they are in many areas, and borrowers do NOT need to be rewarded with taxpayer money for over-extending themselves…
…In closing, as bad as it was waking up to Hillary Clinton on my tv…I would rather be forced to see pictures of her cleavage (don’t ask me why that was nationwide ‘news’) than have to see the results of her proposed guvment programs.
Jonathan Hoenig at Smart Money similarly blasts Hillary’s housing scheme:
[A]mericans, especially many populist politicians, believe that individuals deserve to have their mortgage paid simply because they can no longer afford to pay it themselves. Forgetting the fact that these individuals willingly took out loans well beyond their means or didn’t plan for a rainy day in which the real estate market wasn’t soaring, politicians on both sides of the aisle say they are entitled to keep their home. So they plan to take other people’s hard-earned money and give it away…not because these individuals did anything to deserve it, but simply because they need it. It’s the essence of the “entitlement mentality” I wrote about last winter.
The purpose of government is to protect my rights — end of story. But because there is no such thing as a right to a home, using taxpayer dollars to bail out homeowners or home lender, is an immoral abuse of governmental authority.
Those who advocate for such measures tend to think with their hearts instead of their heads. When challenged about the morality of such schemes, they usually present a tragic example about a down-on-their-luck Rust Belt family who are in danger of being evicted from their home. Dad lost his job at the plant, mom is on dialysis and takes care of the kids, all of whom desperately need braces and new books for school. The argument is always an emotional one: “Don’t you want to help poor people in need?”
But a government bailout is not charity — it’s coercion. Americans are incredibly charitable people, last year donating a record $295 billion. But when you donate to Habitat for Humanity, for example, you do so voluntarily, deciding how much you’d like to give and to what particular cause. When Hillary pledges $1 billion in financial aid for homeowners, however, it’s not her money; it’s the taxpayers’, many of whom would undoubtedly prefer to give to any number of other deserving recipients.
The other tactic used by proponents of a bailout is to demonize the banks and mortgage companies for making “predatory” loans to financially unstable families, as if somehow loaning someone money is harming them. What’s ironic is that for years, elected officials chastised businessmen for failing to offer loans to people with poor credit. After the private sector stepped up and many billions in loans to lower-income families, many of those loans are not being paid back, and those same businessmen are being criticized for making the loans in the first place. Indeed, businessmen are the scapegoat either way.
The more the government gets involved in mortgages and banking, the tighter credit will become. But beyond the impractical reality of collectivist economics, a bailout of homeowners facing foreclosure would be an immoral violation of the property rights of the millions of citizens who live within their means and pay their bills on time. The responsibility of paying back subprime mortgage rests with those who took them, not the publicity-seeking politician eager to sacrifice the individual for the “public good.”
One last analysis to share with you from Matt Carrothers, who dubs her Hillary Clinton Corleone:
There is a key sequence of scenes in “The Godfather: Part II” in which a young Vito Corleone exerts his ascending power and influence over New York’s Little Italy neighborhood. A poor widow named Signora Colombo asks Corleone to intervene with her landlord, Roberto, who wants to evict her. Colombo cannot afford to move, and she has no where else to live.
Corleone seeks out the landlord Roberto and offers to pay six months of Signora Colombo’s rent in advance, at an increased rate. Roberto refuses, but soon finds out that Vito Corleone is not a man given to negotiation. A trembling Roberto then visits Corleone and says that Signora Colombo can not only stay in her home, but he will greatly reduce her monthly rent. Roberto leaves, and Corleone’s friend Genco declares, “God Bless America. We’re gonna make a big business.”
The Democratic presidential candidates see today’s Signora Colombos – families who defaulted on adjustable rate, sub-prime mortgages they could not afford – just as Corleone saw the poor widow – as helpless perdente, manipulated by others, who could not survive the mean streets without the helping hand of Don Vito Government.
On August 7, Sen. Hillary Clinton announced her detailed plan to “address mortgage lending abuses.” Clinton’s press statement, found on her web site, begins, “With foreclosure rates continuing to skyrocket across the country, Senator Hillary Clinton . . . laid out a plan to preserve the American dream of home ownership that would crack down on unscrupulous brokers, curb mortgage-lending abuses, assist families facing foreclosure and expand affordable housing options.”
The concept of borrower responsibility is obviously lost on Clinton. She then cites the plight of her own Signora Colombo, a woman named Kristi Schofield. Kristi and her husband can no longer afford to live in their home, because their adjustable-rate mortgage payments grew from $2,400 to $6,000 per month.
Signora Schofield said, “We tried to do the right thing and continued to make the payments as long as we could with our savings and what earnings we had from unemployment, temporary and part-time work.”
Schofield added, “Hillary Clinton is standing up today because she wants to help protect the American dream.”
In truth, Clinton’s plan would heap onerous and needless new regulations on the mortgage industry and establish a $1 billion housing trust fund to help “at-risk borrowers avoid foreclosure.” In other words, Clinton’s plan requires responsible taxpayers to subsidize the mortgage payments of deadbeats unable to comprehend the concept of adjustable mortgage rates.
Worse, if Clinton’s plan and similar plans touted by her Democratic opponents were to become law, the element of risk in borrowing and investing capital would disappear. If borrowers and investors incur no risk due to federally subsidized payments, nothing would stop lenders from inflating their home mortgage rates far beyond market-established values. Government subsidies have already distorted the free market and raised costs through agriculture, college tuition and health care programs.
The mafia analogy is on target. Check out my past posts on Clintonite Franklin Raines and Fannie Mae’s corruptocrats.
March 27, 2015 08:54 PM by Doug Powers
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