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Bruce Bialosky

Kamala Harris Remarkably More Stupid Than Maxine Waters on Mortgage Loans

The 2007-2008 mortgage crisis caused a serious recession in America affecting the world economy. We all lived through it. I did not think that anyone would stoop below some of the atrocious policies enacted by our government prior to that crash. Senator Harris has a plan called Combatting the Racial Homeownership Gap and it is remarkably more insane.

Let me take you back to the aftermath of the financial crisis where people were beginning to grasp what happened from the rearview mirror. I wrote Kill All The Bankers https://townhall.com/columnists/brucebialosky/2011/10/10/kill-all-the-bankers-n1048576
Congresswoman Waters proposed at the height of the mortgage boom leading to the crash that she wanted to expand the loans made to the Black Community. Her thought was if you can pay rent, you can pay a mortgage. She totally disregarded the other relevant costs like surprise necessary repairs that homeowners must make like a broken waterpipe or replacing a water heater.

Presidential candidate Senator Kamala Harris has taken Waters’ utterly stupid and financially dangerous proposal and doubled down on it to appease two important Democrat constituencies: Blacks and Hispanics. Harris’s plan, https://kamalaharris.org/homeownership-gap/, is not totally trash as it has many aspects to it. Her proposal to additionally educate certain communities about the obligations and realities of home ownership has admirable intentions. It is just that it should happen prior to someone buying a home and not afterward when they have already potentially committed a slew of mistakes. Teaching them after they bought a home is like teaching someone to drive after they have been driving a car for year. Too late now. It typically takes years of planning to buy your first home.

And then there is the reality of defaults. A study done at the time of the Housing crisis by the Center for Responsible Lending (https://www.responsiblelending.org/mortgage-lending/research-analysis/foreclosures-by-race-and-ethnicity.pdf) showed that both Blacks and Hispanics lost their homes to foreclosure at a rate 78% higher than White families. There may be many factors involved in the reason that such higher rates of default were experienced by these groups. The most obvious one is that these groups took advantage of looser lending requirements and acquired homes they could not financially support. When prices for housing slumped, they had no financial rationale to continue to feed a home that would not regain its original value when they were so financially stressed, and they now had negative equity in the property.

The crux of the plan offered by Senator Harris transfers up to $100 billion HUD administered grants (free money not needing to be repaid) for down payments and closing costs for first time homebuyers. One would assume these would be for primary personal residences, but that was what borrowers told the government in 2005-2007 and then they turned around and rented out the properties. This is supposed to help up to four million taxpayers/families. It is limited to $25,000 per applicant. Magically that $25,000 gift from the taxpayers of the United States will in short order become $29-32,000 in the hands of the new homeowner as stated by Harris.

The plan has a multitude of limitations and requirements to qualify, all developed to show the need for the program and that they are apparently being responsible while handling out $100 billion of taxpayer’s money. Here is the catch — they also must change a lot of rules to make this work.

First, they change what is reported under the Fair Credit Reporting Act to create new rules on what is “creditworthiness.” They make up new rules for lenders to determine creditworthiness. They will for the umpteenth time change our laws to make them less discriminatory since the first 20 changes did not seem to work enough to accomplish that.

Otherwise they are changing the playbook to increase homeownership as HUD did under Andrew Cuomo as HUD Secretary for Bill Clinton and the banking bill did which was signed by Clinton in 2000. Just ask yourself how that worked out for America?

The plan starts laying out the case that these two minority groups have less financial success with homeownership than whites. They omit one major factor as what causes the disparity: children born out of wedlock. The Center for Disease Control which keeps these statistics recently reported the percentage of out of wedlock births by group: 17% Asians, 29% Whites, 53% Hispanics and 73% Blacks.

Here is my program. I did not design it, but it is almost foolproof. Finish high school, get a job, wait until you are 21 years old to get married and then have a child. Then start saving for a personal residence. My program does not cost $100 billion. It does not require an expensive new government program with highly paid government employees. And everybody wins.

In the time period since 2010 63% of all new homeowners are Hispanic while they represent only 18% of the population. Apparently, Senator Harris does not know this fact or she put Hispanics in here to appease them while actually designing the program for her favored minority – Blacks. Either way it is quite apparent that Hispanics do not need a new government program that hands out large amounts of money with no recourse.

This program by Senator Harris is astonishingly stupid. It is particularly stupid and irresponsible because of the recent experience our country had from flaky loan programs and unqualified borrowers. Usually programs are designed to yield success based on prior success, not a program based on prior immense cataclysmic failure. “If only we had given out more free money, it would have been a success” is not a winning battle cry. And when the program fails who gets stuck with the massive amount of bad loans? You guessed it — the U.S. government.

It is probable that Senator Harris developed this program only to pander to major Democrat constituencies to win that nomination. She probably has zero interest in actually doing this. She can’t be this stupid. But based on prior experience she is this conniving and overtly political.