Tag Archives: Down payment

Making The Only Reasonable Political Move

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Recently, the California legislature passed a bill providing up to $150,000 to help illegal aliens purchase homes in the state. Never mind that in California $150,000 might buy you a garage if you are lucky. Well, Gavin Newsom vetoed the bill. Aside from the fact that the State can’t afford the cost, I believe that he is eyeing a presidential run in 2028 and does not want that bill on his record.

Politico posted an article about the veto on Friday.

The article states:

The Democratic governor’s veto comes a day after former President Donald Trump said he would ban undocumented immigrants from receiving home mortgages if he returns to the White House. It also takes the issue off the table ahead of Vice President Kamala Harris’ first scheduled debate against Trump next week. Karoline Leavitt, a Trump campaign spokesperson, described the California bill last month as “fundamentally unfair but typical Democrat policy.”

The article also notes:

Newsom has repeatedly warned fellow Democrats in Sacramento not to provide cannonfire for Republicans in an election year, issuing pleas for them to tamp down the raging culture wars rather than provoke them with hot-button issues ranging from banning youth tackle football to reparations. On other proposals that were unlikely to become law, he pushed state Democrats to subordinate their virtue signaling so conservative media outlets couldn’t paint the state as wildly out of touch with America.

Newsom’s concerns have only grown since the elevation of Harris as the party’s nominee, since she hails from California. At a briefing Friday on an unrelated topic, the governor denied that he was trying to send a message to lawmakers in his party, saying he vetoed the bill on its merits.

“The bill that was sent to me was [on] a program that had no money, and it was expanding eligibility to a program that had no money,” Newsom said. “It seemed rather curious to me. So it was unnecessary and completely consistent with prior vetoes along those similar lines.”

Republican state Sen. Brian Dahle, who represents a rural Northern California district and ran against Newsom in the 2022 gubernatorial race, said in an interview that the governor did the right thing. But, Dahle said, he believes Newsom was in fact “reading the tea leaves” on the political implications of the bill.

Passing this bill will have created more scarcity in an already scarce housing market and increased the price of housing–both in rentals and in purchases. Also, at a time when crime by illegal aliens is rapidly increasing, it might not be a good idea to give them further incentives to come to America.

Recreating The Housing Bubble

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On Friday, The Daily Caller posted an article about the government making changes in the mortgage industry that will put the taxpayers on the hook for unpaid loans (sound familiar?).

The article reports:

The administration’s policies and price cuts at the Federal Housing Administration – the latest coming on January 26 — are squeezing the private sector competitors. President Barack Obama and the FHA are engineering things so that just about anyone with a modest down payment who wants a mortgage needs Uncle Sam to get it.

FHA was originally conceived as a vehicle only for low- and moderate-income individuals seeking modest homes and mortgages who were not served by the conventional market. Today, FHA is insuring very large mortgages for people in all income brackets (including ones that absolutely can get mortgage financing in the conventional market). Thanks to prodding from the administration, the FHA mission’s has been transformed in a way that grows the government’s market share, puts private capital in the backseat, and exposes the taxpayers to even greater risks due to their 100 percent guarantee.

After the Dodd Frank law required that lenders to make sure borrowers have the ability to repay mortgage loans, the FHA loosened the standards for FHA loans. This is setting up the taxpayers to be the ones that will have to bail out those loans.

The article concludes:

Fool me once, shame on you. Fool me twice, shame on me. Together the Obama administration and the House and Senate committees looking at the whole business are setting the mortgage market on a path to where — as it now is with student loans — anyone who buys a house will have a government guaranteed loan. This is about as far from the founder’s vision of limited government as one can get. Instead, policymakers should be taking steps to strengthen the private mortgage insurance industry to minimize the exposure of us all to bad policy.