Before considering the intiative:
- Remember the housing collapse that ensued when banks--which aided and abetted the housing bubble--suffered hundreds of billions of $$$s in losses? Due to defaults and write-downs, the U.S. economy went into recession.
- Remember how, following the housing collapse and Fannie Mae's bankruptcy, President Obama and congressional leaders said Fannie Mae's presence of in the housing market needed to be reduced?
But, guess what? Fannie Mae is back at it, with the President's blessing. To wit:
- a new "HomePath Ready Buyer Program" for first-time homebuyers to receive up to a 3% rebate of a home's purchase price if they buy a Fannie Mae property;
- the program could create $4.5k in savings on a $150k home for first-time buyers; and,
- in addition to the 3% rebate, Fannie Mae will refund the cost of the homebuyer education course.
Of couse, President Obama only wants to make homeownership affordable to more borrowers. Who might that include? Credit-worthy borrowers who have enough income to afford a loan, but have not saved enough for the larger down payment that's now require as part of the "reforms." Why this reform? The housing collapse taught the lesson that requiring a small downpayment or no downpayment at all on the purchase of a house was at the heart of the real estate collapse.
The "HomePath Ready Buyer Program" is exactly what caused the subprime mortgage crisis and housing crash. It potentially will leave taxpayers on the hook for yet another mega-bailout because Fannie Mae is "too big to fail."
It's time for Congress to put an end to this nonsense. When something doesn't work, fix it and stick with the fix. Don't replicate the failed policy in some vain hope that the outcome will be different.
Let the discussion begin...
To read the Fox Business report, click on the following link:
"Fannie and Freddie Restart Risky 'Affordable Housing' Programs."