Home > Finance and Economics, Uncategorized > Democrats running the mortgage market into the ground. Again.

Democrats running the mortgage market into the ground. Again.

Remember during the 2008 campaign when Democrats couldn’t stop telling us how the Bush administration and Republicans caused the mortgage crisis?  And how Barack Obama and Democratic majorities in both houses of congress was the only way to heal the mortgage market? 

Yeah, about that:

Loans guaranteed by the Federal Housing Administration, the U.S.-owned mortgage insurer, may be involved in more home-purchase transactions than borrowing financed by Fannie Mae and Freddie Mac.

The FHA and Fannie Mae and Freddie Mac, which regulators seized in 2008, have been financing more than 90 percent of U.S. home lending after a retreat by banks and the collapse of the market for mortgage bonds without government-backed guarantees.

FHA lending last quarter may have topped the combined volume of government-supported Fannie Mae and Freddie Mac in a home-lending market that’s still a “government-financed market,” David Stevens, the agency’s head, said today at a conference in New York, citing research by consultant Potomac Partners.

“This is a market purely on life support, sustained by the federal government,” he said at the Mortgage Bankers Association conference. “Having FHA do this much volume is a sign of a very sick system.”

The FHA, which backs loans with down payments as low as 3.5 percent, insured $52.5 billion of home-purchase mortgages in the first quarter, compared with $46 billion of purchases of the debt by Fannie Mae and Freddie Mac, according to data compiled by Washington-based Potomac Partners.

Got that? Very. Sick.

As much as the American people and our elected overlords in Washington would like to just wish the mortgage mess away, the reality is that there still is a mortgage mess.

The GSEs are accumulating mortgage loans and are housing them off the books of the federal budget.  In other words, the liabilities are off-balance sheet items, and the risk is swept under the rug.  But now the rug is one big bloated rug, bursting at the corners. 

The Federal government now holds the majority of mortgage loans in the United States, and with delinquencies on the rise, guess who’ll  be left holding the bag when the whole thing comes crumbling down?  Yours truly. 

But let’s see now.  The Democrats have essentially been in control of the Federal government for the better part of three years now.  They’ve had the majorities and the wherewithal to shape economic policy to their liking.  And the mortgage market is still in the toilet.

Miss Bush yet?

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