Right Hooks

Housing Market Crash Bells Are Ringing

Jan. 5, 2015

Is another housing market crash in the works? That’s a question some are pondering as the new director of the Federal Housing Finance Agency (FHFA) implements some of the same policies that rocked the economy shortly after Democrats took control of Congress in 2006. The Washington Examiner writes, “Mel Watt has been the government’s manager of mortgage giants Fannie Mae and Freddie Mac for only a year, but his efforts to boost access to home loans over the past 12 months have the incoming Republican majorities in Congress concerned. Even as credit remains historically tight, Watt’s actions have provoked fears that he is leading the mortgage giants down the same path that led them to fail in 2008 and receive massive taxpayer bailouts.” Among the regurgitated policies? “[P]utting off a fee increase on the insurance that Fannie and Freddie provide on mortgage-backed securities, planning to back loans with down payments as low as 3 percent, and, most recently, directing money toward an affordable housing trust fund decried by conservatives as a ‘slush fund.’” Recall that the so-called fix for the housing market implosion was to centralize more control. Now that the feds have more leeway, the question is: Why are they recycling failed policies? Well, wasn’t this their plan all along – to facilitate bigger government regardless of the consequences? More…

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