A New York Times report on the Federal Housing Administration’s subsidies for higher-priced real estate reveals the insanity of federal housing policies. The 2008 stimulus package signed by President Bush temporarily doubled the maximum loan the FHA insured to $729,750 on single-family homes. Coverage on multi-family units can exceed $1 million.
Downsizing Blog
Government Housing Adventures
The Wall Street Journal is reporting that Fannie Mae and Freddie Mac, which have already consumed $112 billion in taxpayer bailouts, may have additional losses if they can’t recoup claims from struggling private mortgage insurers.
Public Housing for the Dead
The HUD Inspector General’s Office released an audit earlier this week on the department’s progress in making sure local public housing agencies aren’t subsidizing the deceased. According to the report, local “agencies made an estimated $15.2 million in payments on behalf of deceased tenants that they should have identified and corrected.”
FHA Woes Continue
Over the past decade, the Federal Housing Administration has been insuring riskier mortgages in an attempt to regain “market share” lost to private competitors during the housing boom. But after the housing bubble burst and private firms either went out of business or reduced their risk profile, the FHA continued to plow ahead insuring risky mortgages. This could all backfire on taxpayers.
Chicago's Housing Subsidy Debacle
I haven’t followed the controversies surrounding Valerie Jarrett, a senior advisor to President Obama. However, her tenure as the CEO of a company that received federal money to run a public housing project deserves further scrutiny.
Government Picking Up Subprime Slack
According to a new report from the Federal Reserve Bank of San Francisco, the Federal Housing Administration has “revived” the subprime segment of the housing market. Thanks to FHA lending, “the share of borrowers with FICO credit scores lower than 660 has returned to just higher than 20 percent, the same share as when subprime securitization peaked in 2006.”
Fraudsters Target Home Tax Credit
The Wall Street Journal reports that the IRS is investigating 100,000 “suspicious” tax returns over possibly fraudulent claims of home buyer tax credits. Included in the economic stimulus package in February, the $8,000 tax credits were set to expire at the end of November, but the housing lobby is pressing Congress for an extension.
D.C. Squanders Federal AIDs Money
The Washington Post has delivered an exposé on the rampant corruption and waste occurring in the District of Columbia’s HIV/AIDs Administration. According to the Post, “the agency receives about $100 million a year, largely from the federal government, for prevention, medical care, housing, case management and support services.”
White House Reinflating Housing Bubble
The Wall Street Journal reports that the Obama administration plans on spending $35 billion on state and local housing agencies to bolster lending to low- and moderate-income home buyers. The effort would come on the heels of other federal interventions to prop up the ailing housing market:
ACORN Scandal Should Spur Broader Cuts
Republicans are all over the ACORN scandal and calling for an end to federal subsidies for the group. That would be a good step, but it’s not exactly going out on a limb and pushing for major budget reforms.