The Republican Party came out of its convention in Tampa, FL with aÂ platform on housing, stating that they would get government out of housing once and for all and put an end to bailing out banks and homeowners with taxpayer dollars.
"Taxpayer dollars should not be used to bail out borrowers and lenders by funding principal write-downs. While the federal government must prosecute mortgage fraud and other financial crimes, any settlements received thereby should be directed to individuals harmed by the misconduct, not diverted to pay for unrelated programs."
Translation: "We're adopting President Obama's housing policy that barely lifts a finger when it comes to homeowners, who we consider "deadbeats." Furthermore, we will not force banks to write down principal balances, which would render them insolvent, especially on their nearly $400 billion in second mortgages. Alas, we'll allow the federal five year statute of limitations to expire (just like Obama and Holder) on major mortgage and securities fraud by the Too Big To Fail banks. Instead, we'll leave investigations to the states, with their 10 year statute, who don't have the expertise or funding to even bother to pursue crimes that led to the Great Recession, and wiped out the savings and home equity of the middle class."They also stated the greatest myth about the housing crisis, also known as theÂ Peter Wallison dissent:
"Fannie Mae and Freddie Mac were a primary cause of the housing crisis because their implicit government guarantee allowed them to avoid market discipline and make risky investments."
Not really. Good try GOP.
Wall Street took The Fed's easy money policies and went wild, creating and exporting debt across the globe, using the American middle class homeowner as easy prey for their great boondoggle. Fannie and Freddie have always invested in "A-paper loans" that conform to their guidelines of 700+ FICO scores (they did relax guidelines during the bubble when they started losing market share and invested in the highest grade subprime loans, that were nearly identical to Fannie/Freddie quality loans). They didn't offer 100% financing to borrowers with 540 FICOs or borrowers one day out of bankruptcy. That was a Wall Street creation. Trust me, I have Rain Man knowledge of the lending programs that every lender was offering.
The housing bubble and housing crisis, in due time, will be considered a massive failure caused by The Fed, Wall Street, and their bi-partisan Washington enablers who caved into the banker's demands to deregulate financial markets, especially derivatives likeÂ Credit Default Swaps that sunk AIG, and would have led to other banks going down had the US Taxpayer not been called in to bail out the Wall Street banks.
And it's the US Taxpayer, or Uncle Sam, through Fannie Mae, Freddie Mac, and FHA, who picked up the slack in the mortgage market, issuing 92% of all mortgages since 2008. If it weren't for the full faith and credit of the United States, the housing market would have sunk to even greater lows, and instead of having aÂ 10 year distressed inventory on our hands, we'd be faced with 20 year inventory.
The GOP housing plan is pretty much the status quo, in that it's full of nice ideology and rhetoric, but in reality, it won't ever come to fruition. Kind of like hearing candidate Obama of 2008 make promises he couldn't keep. You hear it and think, "People are stupid enough to believe this guy?" And, yes, millions of American's fell for his false hope.
At this point, the government cannot get out of the mortgage business because it would collapse the housing market, which would in turn collapse the banks, who hold trillions of mortgage debt on their books. Plus, theÂ banks are currently realizing big profits selling loans to government, enjoying another back-door bank bailout of sorts The GOP is not serious about returning the housing market back into the hands of the private sector any time soon. There's still 10-15 million underwater mortgages that need to be worked through the system, and the only entity large enough to handle the catastrophic losses that will accompany these loans, is the federal government.