Another Step In The Wrong Direction
May 29, 2008
Whenever the government intervenes to solve a free market problem the outcome is always the same...ten new problems are created and the original problem remains unsolved.
And Democrat Senator Christopher Dodd’s “Federal Housing Finance Regulatory Reform Act of 2008” is no exception.
According to Dodd, this legislation, “marks tremendous progress in my ongoing effort to help stabilize our markets and provide relief to hundreds of thousands of Americans who, due to no fault of their own, are struggling to keep their homes.”
“Due to no fault of their own”?
What is he talking about?
I thought he was talking about adults making adult decisions and taking responsibility for those decisions.
The Hartford Courant had just published a story about one of these adults prior to the passage of Dodd’s bill.
Let’s see what “no fault of their own” really means.
On May 11, the Courant published Homeowner's Hopes Ride With State Mortgage Reform Bill which recounted the sad saga of Lisa Murzin-Pelcz's decent into foreclosure.
In the early 1990’s she and her two young children left her first husband and lived in a variety of places until her husband died and she and her children “qualified for Social Security benefits”.
So, she went out and bought an $80,000 home through the taxpayer subsidized Connecticut low-income first-time buyer program. This program gave Murzin-Pelcz a mortgage “At 7.5 percent interest (and) her monthly mortgage payment with escrowed taxes and insurance premiums totaled of $970”.
Even with a local school system job and a second job at night, she claimed that “Money was tight”. So, she took a second mortgage to pay off “some bills”.
Even though her finances were still “fragile” she remarried and had a third child in 2004.
By 2005, with her house then worth $167,000, Murzin-Pelcz took an 11.75% mortgage “to pay for a divorce lawyer and consolidate other bills, including a car loan”.
Within about a year, “her oldest daughter turned 18 and no longer qualified for the Social Security payments” so she took a second mortgage to pay the arrears on her first mortgage.
The market value of her home soon declined to $97,000 and there was no way to refinance up and keep robbing Peter to pay Paul.
Let’s recap:
§ Lisa Murzin-Pelcz had two children in a lousy first marriage.
§ Then Murzin-Pelcz, using both Social Security death benefits and a taxpayer subsidized state program, purchased a home 12 years ago.
§ She then entered a second lousy marriage and promptly had a third child.
§ Murzin-Pelcz soon divorced her second husband using money from a refinance to pay for that divorce.
§ Having milked all of the first mortgage equity out of her house, she then took a second mortgage and milked the house to death.
§ After losing some taxpayer money that her daughter had been receiving she went into default and is about to lose her house.
So an adult purchasing a home and squandering its equity (for whatever purposes) by continually mortgaging it to the hilt is what Senator Dodd means by “due to no fault of their own”.
And what solution does the Federal Housing Finance Regulatory Reform Act of 2008 provide for irresponsible adult behavior?
In the “historic bipartisan compromise” amendment that enabled passage of the bill, the solution seems to be fingerprinting mortgage originators.
In an attempt to weed scam artists out of the mortgage originating business, the amendment mandates that, “In connection with an application to any State for licensing and registration as a State-licensed loan originator, the applicant shall... furnish ...fingerprints for submission to the Federal Bureau of Investigation, and any governmental agency or entity authorized to receive such information for a State and national criminal history background check....”
Beautiful...another privacy intrusion of people trying to earn a living brought to you by your government.
Nowhere in the bill or the amendment can I find anything about background checks for the borrowers.
For that fact, the onus of repayment ability is put on the shoulders of the lenders but, at the same time, the lenders are also mandated by the bill to promote low income and minority home purchases.
In fact, they are obligated by the bill to report their demographic statistics on lending to the government to ensure that they are not discriminating against low income or minority borrowers.
This is brought to you by the same U.S. Democrat Senator Dodd who vehemently opposed any requirement to produce photo identification in order to vote.
As Dodd saw it, “A photo ID requirement is nothing short of a 21st Century poll tax... To suggest that all voters need to produce ID at the polls to vote in person is unprecedented and designed intentionally to erect artificial barriers to minorities”...blah, blah, blah.
This is also the same U.S. Democrat Senator Dodd who threatened a filibuster in order to strip the Foreign Intelligence Surveillance Act of a provision that would retroactively provide telecommunications companies with immunity for allowing the government access to their networks to conduct warrantless surveillance of suspected terrorists.
Yet, that same Senator Dodd is more than willing to require mortgage originators to submit their fingerprints to yet another government data base and be assigned “unique identifiers” while requiring little accountability from the borrowers themselves.
This is like saying that the 9-11 hijackers were killed “due to no fault of their own” and the airlines should be held accountable.
Why don’t our elected officials just get it over with: publish all of our vital statistics including Social Security numbers; take all of our assets and just kill us.
It is more merciful than being bled to death a drop at a time in an insane asylum.
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