Call it ObamaMortgage.
And it’s bipartisan!
According to Robert Romano, the senior editor of Americans for Limited Government, lawmakers want to “create a new government entity” (yay!) to supervise the forced creation of a mortgage insurance fund that would supposedly replace the need for government bailouts (but keep reading, because it won’t). The mandatory insurance fund rises to 2.5 percent of outstanding loans after 10 years. As Romano notes, it will be borrowers who will ultimately have to pay this additional cost — and since those who put less than 20 percent down already pay mortgage insurance, the additional cost will inevitably fall on people who do put 20 percent down.
If insurers were to choose to create a risk pool, that would be one thing. But the reason this is going to be mandated is because the government still wants lenders to make mortgages available to sketchier applicants.
So, to sum it up: people who can’t really afford the mortgages will be subsidized by forcing people who can afford them to pay more.
Starting to see the resemblance to ObamaCare?
It’s also similar in that, while it is nominally intended to do away with bailouts, Romano notes that the bill actually guarantees bailouts — something that, with Fannie and Freddie, was always an implicit guarantee, but now will be explicit:
To wit, the bill states, “The full faith and credit of the United States is pledged to the payment of all amounts from the Mortgage Insurance Fund which may be required to be paid under any insurance provided under this title.”
So, how exactly will the bill protect taxpayers from losses? It sounds more like homeowners will pay for it first, and then if and when that doesn’t work, investors are given an explicit government guarantee — something Fannie and Freddie never had.
Indeed, a bill to do away with bailouts now guarantees them. Again: sounds like ObamaCare.
The difference here? This is bipartisan. And Obama supports it. Which means it is happening.
Continued government interference in the free market, with its attendant disastrous consequences, continues apace. And there is nothing you can do about it, citizen, except shut your mouth and take it.