Is Homeownership a Dream or an Entitlement? – The Loan Quota Rule –

Warning:  This post is politically charged.  Close immediately if you don’t like this side of me.  My feelings will not be hurt.

I was reading the Wall Street Journal early this morning and I found the article linked below on A 14 under the Review & Outlook column in the Opinion section.  Hopefully you can read the article without subscribing.  If you cannot and would like to; contact me and I will email the text to you.

“For the latest example of regulatory overreach, look no further than the Department of Housing and Urban Development, which is pushing through a rule to support racial loan quotas a few months before the Supreme Court will rule on whether that’s legal.  The Obama Administration’s “fair housing” agenda, apparently, just can’t wait.”

via Review & Outlook: The Loan Quota Rule –

Loan’s should be made based on ability to pay them.  If you want to say this is discriminatory,  you can certainly do so but my parents lived most of their life as renters because they just didn’t make enough money to qualify for a loan.  Were they discriminated against because they were poor, foreign or beige?  No, they were not.  They simply could not afford a home and I never once heard them complain about it.  They managed to finally buy their first home in 1979. This was after my dad was diagnosed with Black Lung and lost his job of 25+ years because he could no longer work underground.  Did he receive workman’s compensation?  N,o he did not.  Did the United Mine Worker’s help him win an appeal for disability?  No, they did not.  He was forced to takeearly social security and my mother started a cleaning business in northern New Mexico when they relocated there.  The cost of living was really lowat the time.  They took their tiny life savings and bought the least expensive house they could find with 50% down so they could qualify for the loan.  The total cost of the home was $40k.  It was not a palace but they were proud to be homeowners.

Mortgage relief should go first, to those that put 20+% down through a legitimate, documented loan.  These were the rules — like it or not — and people had to play by them in order to buy a home.  Well…they did until quotas were placed on lenders.  Both political parties condoned this practice that goes back to Clinton days.  The lender’s started loaning money under a whole different set of rules for fear of not meeting the quotas imposed.  But the average American  still got slapped with PMI (Private Mortgage Insurance) if they did qualify for a mortgage with less than a 20% down payment.  Look it up if you don’t believe me.  I had to pay it on my first condo and my next move-up buy to a slightly nicer place.  I was highly motivated to pay down my loan and increase my equity so it would go away.  It was an additional $200+ for me that was a complete waste of money but again, those were the rules.

Instead of being given bailouts, Mortgage companies should have been forced to reduce interest rates for people with conventional loans so that they were given a chance to recover from the huge declines in property value and loss of income due to unemployment.  It is complete discrimination to only help those that were in homes they could not afford to begin with.  This is exactly what is happening now with the “Making Homes Affordable Program”.  People who are working longer hours to recover wages from extended unemployment are penalized in this program.  For those of us who lived off retirement savings and continued trying to pay mortgages while unemployed, huge tax penalties applied.

If the money given to banks for mortgage bailouts were distributed to American’s with documented loans in which they invested the required 20% down payment, things would be much different today.  If the bank forecloses on a property, they can auction the property and write off the loss.  Why does the government reward the lender for selling a $800k foreclosed home at auction to a real estate bottom feeder for $275k?   Why aren’t lenders forced to offer the same terms to the person that has lived in the home for years and that paid their mortgage religiously?   Why can a lender accept a short-sale price from a stranger and not offer the same adjusted mortgage to the original homeowner?  Why is the homeowner the one that suffers the loss with no relief while the corporation is made whole by the US Government?  Does this sound like a “fair” system to you?

In my case the bank actually wanted to foreclose.  Their liability was far less than mine because I put so much down on my property.  I was forced into a very bad modification which raised my mortgage significantly and that did not lower my interest rate by even one tenth of a point.  My lender actually profits more in the long run.  I suffer.  Why did I not walk away you ask?  I put 30% down ($300k) on my place when I bought it.  It was every cent of savings I had and the result of equity gained from slowly pulling my way up .  I did not buy my home to speculate.  I bought it to live in.  If I walked away — I would have been walking away from all that I had saved over the past 20 years of my life.  So now over 60% of my net income goes to covering my mortgage and association dues and my home is still worth less than half of what I paid for it.  It is not a pleasant situation but it is what it is.

The Department of Housing and Urban Development, once again, wants lenders to be forced into minority lending quota’s.  Lending should be available to all races, religions and sexual orientations based on the ability to qualify and pay the loan; period.  Owning a home is “The American Dream”NOT  “The American Entitlement” as it has been sold since the Clinton and Bush Administration and escalated by the Obama Administration.

The solution to affordable housing availability is to focus our attention on building affordable housing so that the housing needs of more American citizens can be met with a price tag people can afford.  Bureaucratic red tape needs to be slashed and fees need to be waived by greedy government agencies so that these projects can be built cost effectively, quickly and efficiently. Very few Americans actually realize how high the costs are for a builder before they even break ground on a new home.  It adds significant cost to home ownership.  Tax incentives should be given to building material suppliers that offer special pricing programs for construction supplies in affordable housing projects but sans the nightmare, red-tape ones that exist today.  The same holds true for the many companies that donate reclaimed materials that can also be utilized in construction.  Incentives should be there for doing the right things to solve this critical need.

Small grants should be available to architectural and engineering students to develop cost affective,  modular housing models that are clean, safe and energy efficient.   Take a look in Dwell Magazine for some of the incredible pre-fab homes being marketed.  Some of them are admittedly expensive but the concept is incredible and it makes me think about all the materials we throw away in our society that could be used to create homes.   I have posted a link below to give you an idea of the concept of using freight containers.  The possibilities are endless.  The City of San Diego has urban blighted property that could be utilized to build innovative pod-like communities with community gardens.  I am told you can buy a freight container here for $1500 and that includes delivery to the property.  How about an experiment in turning one of these lots into a modular community and in the same vein as that used by Habitat for Humanity?  Sweat equity in the project is part of the cost of ownership.  If a small urban home in a nicely landscaped community were available for $25-$30k – would people be interested?  I think so and I would be there to volunteer in the building of such a community.  I think I know a lot of other people that would join me.

The net affect of this type of focus not only brings affordable housing to market; it creates jobs in the process.  When you build a plan that creates something tangible, the economy benefits.  When you create programs and quotas you do little but create more layers of bureaucracy which then becomes the burden of American’s that work and pay taxes.

I will continue to challenge my thought process to be more outside of the box.  To those that criticize my rants, I say step up and offer up something that involves a solution instead of the “The Rich Must Pay More” mantra.  I don’t believe the 1% vs 99% rule.  I think its more like 1 % extreme wealth 70% hard working Americans and 29% who think the rest of us owe them a living.  Maybe I am wrong — I actually hope I am.   I stay planted firmly in the middle.  I am a Constitutionalist and a Libertarian.  I don’t like Democrats or Republicans in office today.  I want to eliminate big government.  I care about people that need a hand-up and I want to see less hand-outs.  I know there are people who genuinely need help and I support these people.  I refuse to support able-bodied people that do not work.  And for the record — I will pay my student loans until every dime I owe is paid…that is all.


Please excuse typos, spelling and context errors…I don’t have a proofreader 🙂

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