Sen. Kamala Harris (D-CA) recently proposed a housing strategy that has the federal government intervene into the real estate market, proving that politicians have no clue how or why the housing crash occurred.
Harris wants to spend $100 billion to help four million households who rent or live in previous red-lined neighborhoods and give them a $25,000 down payment.
The government has tried this before with horrid results.
From Liberty Nation:
Former President Lyndon Baines Johnson signed the Fair Housing Act of 1968 and the Housing and Urban Development Act of 1968, federal mortgage programs that aimed at helping redlined communities. Under this initiative, the minimum down payment was only $200 and federally subsidized interest rates were just 1%.
After just a few years, the efforts were tossed in the waste bin because of poor results.
Not only were fraud, waste, and abuse rampant, but there were also high foreclosure rates. It is estimated that one in eight homes were foreclosed on and foreclosures topped ten times the rate of conventional mortgages.
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The Community Reinvestment Act of 1977, which was later updated in the mid-1990s, pressured private lenders to extend risky loans to borrowers who have historically not qualified for mortgages. Conservatives are right to point out this failed measure, but they also tend to omit one crucial party that funded these transactions: The Federal Reserve.
In 1995, Clinton unveiled his National Homeownership Strategy, a 100-point plan to “boost homeownership in America to an all-time high by the end of the century.” Under this plan, one-third of Fannie Mae and Freddie mortgage acquisitions needed to be a part of the Oval Office’s affordable housing initiative – this figure surged to half by 2005. The government-sponsored enterprises (GSEs) took on bad loans and became the largest buyers of subprime mortgages and helped drive their growth. This measure also diminished underwriting standards.
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Unfortunately, history will not dissuade Harris from adopting an asinine policy. Instead, her case will be emboldened by a new report that shows black homeownership rate plunged 8.6 percent to just about half, according to U.S. Census Bureau data.
But before you shriek about white supremacy, consider this interesting trend: Hispanic families have witnessed the biggest growth in homeownership of all ethnic groups since 2015. Today, 43 percent of Hispanics own a home.
Moreover, this will likely be cited by Beto O’Rourke and Cory Booker who want slave reparations.
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