Fact: Dean Heller continues to fight for Nevada’s middle class families and provide solutions to keep Nevadans in their homes.
Fact: Senator Heller joined Democrat Debbie Stabenow as lead Republican to introduce the Mortgage Relief Act.
- This bill ensures mortgage relief in not taxed as income. It makes sure that underwater homeowners, who owe more on their mortgages than their homes are now worth, would not be soaked with additional income tax if a part of their mortgage loan is forgiven. Bill was introduced March 29, 2012.
- Homeowners would normally be required to pay these additional taxes when they refinance or sell their homes in what are commonly called “short sales.”
Fact: Senator Heller introduced the HOME Act, which allows families who have been foreclosed on to stay in their homes.
- The Keeping Families in Their Home Act would allow banks, Fannie Mae, and Freddie Mac to enter into a lease for up to five years, including lease with an option to purchase, with the prior homeowner or any individual. (S. 2080, 2/9/12)
- The Keeping Families in Their Home would also reduce the number of houses coming into the housing inventory which will help stabilize home prices and restore economic values in our hardest hit neighborhoods. Additionally, allowing foreclosed and distressed properties to be leased rather than remain vacant will reduce blight and reduce crime.
Fact: Senator Heller has introduced legislation to hold banks accountable to homeowners seeking to short sale. Introduced the Stopping Ongoing Lender Delays (SOLD) Act which requires mortgage servicers to respond to a short-sale offer within 30 days, and make a final decision on acceptance within 60 days of receiving purchase offers.
- Bring all short-sale decisions in line with the Federal Housing Finance Agency’s (FHFA’s) April 17th announcement that loan servicers that collect payments for Fannie Mae and Freddie Mae must review and respond to short-sale requests within 60 days.
- Awards homeowners a $1,000 monetary award per violation, if a loan servicer fails to make a decision within 60 days.
Fact: Senator Heller was an outspoken bipartisan leader for initiatives that would spur home sales.
- Supported the first-time homeowner tax credit.
- Twice introduced legislation to try and extend and expand eligibility to any purchaser of a primary residence, not just first-time homebuyers. (H.R. 802, 2/3/2009 / H.R. 3902, 10/22/09)
Fact: Senator Heller has been a strong advocate in ensuring that Nevadans who receive mortgage forgiveness are not hit by a massive tax bill.
- Voted for the Mortgage Forgiveness Debt Relief Act which waived homeowners’ tax liability for any mortgage debt that was forgiven through modified loans, short sales or foreclosure. (House Vote 948, H.R. 3648, 10/4/2007)
Fact: Senator Heller crossed party lines to support more stringent regulations on the mortgage industry to protect consumers.
- Dean voted for Mortgage Reform and Anti-Predatory Lending Act which would have required federal registration for mortgagers, establishes standards for mortgage origination, and imposes liability on companies that do not abide by those standards. (House Vote 1118, H.R. 1728, 11/15/2007)
Senator Heller supported a national housing plan that would mitigate mortgage foreclosures, facilitate and include fairness in housing recovery, and combat mortgage fraud.
- Supported the Fairness in Housing Recovery Act which would have helped troubled borrowers to refinance into loans that better meet their family budgets.
- Included in the bill were provisions to grant flexible authority to the Secretary of Housing and Urban Development (HUD) to insure refinanced mortgages for homeowners, expand HUD-approved mortgage counseling services, and provide additional resources for the FBI and Department of Justice to combat mortgage fraud. (H.R. 1295, 3/4/2009)
For the past several years, it’s not been an uncommon sight in Anytown, USA, to drive down the street and see home after home for sale after going through foreclosure. They are the still-lingering hangover from the housing crash that began in 2007. Though the true cause of what burst America’s housing bubble is still debated, two of the culprits — housing finance giants Fannie Mae and Freddie Mac — are still going strong even though both essentially failed in 2008 and are under government control. Economists and politicians alike are now pondering whether we need Fannie Mae and Freddie Mac at all and what would happen if they were eliminated altogether.
For several years prior to 2007, home prices went through the roof, but then they crashed through the basement. Since then, more than 2.3 million homeowners have faced foreclosure — an 81 percent increase over 2007. This all, of course, contributed to the Great Recession we’re still rebuilding from today. “Easy credit” is pointed to as the corrosive acid that ate away at the housing market’s foundation, and federal government-sponsored mortgage finance giants — the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) — were there to supply it and help other lenders to do so.
Consistent with policies dating back to the Carter and Clinton Administrations, Fannie Mae and Freddie Mac made it easier for low and moderate income Americans to obtain mortgages and purchase homes. In a new paper from The Heritage Foundation, A Housing Market Without Fannie Mae and Freddie Mac: Effect on Home Prices, Nahid Anaraki reports that this “fueled an excessive expansion of credit in the housing sector, shifted the demand for real estate to the right, and caused home prices to overshoot their underlying market equilibriums.” In other words, Fannie Mae and Freddie Mac’s intervention in the housing market helped to fuel the boom-to-bust housing bubble by subsidizing interest rates and enabling reduced down payment requirements on single-family homes, thus unnaturally boosting demand and causing prices to go up.
The trouble with all this, Heritage reports, is that though Fannie Mae and Freddie Mac have made it easier for a family to buy a home, in the long run their actions have a detrimental effect on the economy, as America has witnessed.
So what would happen if Fannie Mae and Freddie Mac were phased out? Would the absence of their ability to offer lower interest loans and smaller down payments impact the cost of homes in America? Anaraki’s analysis shows that it would not. In fact, interest rates and changes in down payment requirements have little influence on housing prices. Instead, fundamentals–such as household assets, personal income, the S&P Index, and the effective tax rate–play substantial roles in shaping home prices. As such, she advises, it’s time for Washington to get out of the business altogether:
The federal government should avoid offering any subsidy in the form of lower interest rates or lower down payments because it adversely affects both the housing market and the economy over the long term. Although such a policy may boost the demand side in the short term, it risks inflating another housing bubble in the medium or long term.
Eliminating Fannie Mae and Freddie Mac, in fact, will help more Americans afford homeownership. Since these institutions increase demand — thereby increasing home prices — it becomes increasingly difficult for lower-income Americans to afford to purchase homes without subsidized interest rates. If Fannie Mae and Freddie Mac are eliminated, interest rates may slightly go up initially, but Anaraki finds that “higher interest rates will lead to lower median home prices, which in turn will increase the ability of low-income groups to purchase a house.” What’s more, competition among housing lenders would increase, leading to lower interest rates in the medium to long term.
Owning your own home is the American Dream, but suffering a foreclosure and winding up on the streets is the American Nightmare. In pursuit of encouraging the former, the federal government helped produce the latter. Government intervention by way of Fannie Mae and Freddie Mac may have given more Americans the keys to their own homes, but they bought homes they could not afford and in a marketplace that could not be sustained. As Heritage showed in an earlier paper, Fannie Mae and Freddie Mac can be phased out without disrupting the housing recovery. A better way forward is to phase out Fannie Mae and Freddie Mac and let the home market find a healthy and sustainable equilibrium.
McMorris Rodgers Reacts to Geithner Testimony on
IMF Funding & Transparency
“Administration Continues to Discount the Riskiness of
U.S. Involvement in the European Bailouts”
Washington, D.C. – Rep. Cathy McMorris Rodgers (R-WA), Vice Chair of the House Republican Conference and author of H.R. 2313, which would rescind a $100 billion line of credit to the International Monetary Fund (IMF), which is being used to bail out European countries, released the following statement today after Treasury Secretary Timothy Geithner testified before the House Financial Services Committee on several issues, including the IMF and the “state of the international financial system”:
“I appreciate the Administration’s stated concern about what is going on in Europe. However, Secretary Geithner was unconvincing in his remarks about America’s role in the European bailouts, including the most recent bailout of Greece announced last week. With the Administration’s support, the IMF – of which the U.S. is the largest contributor – has already committed tens of billions of dollars to Greece, a country which is technically in default. As Representative Neugebauer noted today, U.S. money at the IMF is ‘safe’ in the same way that U.S. money at Fannie Mae and Freddie Mac was ‘safe’ before the 2008 financial crisis. By continuing to dismiss the riskiness of these loans – including his own Department’s estimate of a $5 billion loss at the IMF – Secretary Geithner failed to reassure Congress, and more importantly, the American people, that our tax money is safe.”
In addition, Secretary Geithner was asked today if he would seek Congressional approval before rolling in the $100 billion line of credit (known as the “New Arrangements to Borrow”) to fulfill his commitment to double America’s quota at the IMF. The Secretary replied, “Yes, we will.”
On March 6, Rep. McMorris Rodgers sent a letter to Secretary Geithner insisting that he would need to come back to Congress before taking this action.
H.R. 2313 has 93 cosponsors.
A compilation of the Congresswoman’s work on this issue can be found here.
From the LVRJ:
WASHINGTON — Overshadowed Thursday by the massive mortgage settlement between the states and major banks was the introduction of a Senate bill that could allow people to remain as renters after their homes are foreclosed upon.
The bill by Sen. Dean Heller, R-Nev., allows banks AND Fannie Mae and Freddie Mac to enter leases for up to five years with foreclosed occupants or other renters. After five years, tenants could have an option to buy the home if their fortunes have recovered.
While a small part of the major mortgage mess, Heller said the approach could benefit stressed-out families and keep neighborhoods from disintegrating into ghost towns, as they have in parts of the Las Vegas Valley.
“When families move, their children often have to change schools,” Heller said in a speech. “So now not only are children forced to move from their homes, they are also leaving behind their schools and their neighborhoods. This kind of destabilization is harmful for families who are already struggling.
“By providing an opportunity for the homeowner to stay in their home, the bank is giving families a chance to regain sound financial footing.”
From CBS Reno:
Nevada Senator Dean Heller has presented a bill aimed at helping families in foreclosure – and the housing market as a whole.
If approved, the “Keeping Families in their Home Act” would let Fannie Mae and Freddie Mac offer long-term leases for foreclosures. That way families can stay in their homes as renters — and hopefully ease the pressure foreclosures put on home values.
A similar bill was presented in the House of Representatives last summer. It received bipartisan support.
Guess who’s going to be paying for the Payroll-Tax Cut… That’s right, you are!!! Well, that is if you own a home in the United States.
You see, for the Democrat-led Senate and the Obama administration to pay for this ridiculous 2 month band-aid payroll-tax extension they’ve decided to tax Fannie Mae & Freddie Mac. Seems like a perfect fix right? Get the GSE’s to pay for our payroll-tax holiday… but as is life, it’s not that cut and dry. Since Fannie & Freddie don’t issue mortgage instruments it will be the home mortgage lenders who are responsible for paying this tax. Every business owner, and most Americans (not residing at 1600 Pennsylvania Ave.) realize that nothing in this world is free, someone always pays, and that someone is usually you and me — this case is no different.
Congress and the Obama administration are turning to an unlikely source to pay for the proposed extension of the payroll-tax cut: mortgage-finance giants Fannie Mae and Freddie Mac.
The revenue source proposed by both Senate Democrats and House Republicans would boost fees that Fannie and Freddie collect from lenders. But that is raising hackles in the real-estate industry. Builders, Realtors and lenders say it would amount to a tax that would be passed on to mortgage borrowers.
Fannie and Freddie don’t issue mortgages, but instead buy them from lenders. They bundle those loans into securities that are sold to investors, and promise to make investors whole if the loans default. To cover any defaults, Fannie and Freddie charge “guarantee” fees to lenders when they buy the loans.
Anyone that thinks these mortgage lenders are going to pay said taxes out of their profit, and not pass them down to their customers, is simply living in fantasy-land.
But make no mistake, the banks will pass this increased fee on to borrowers in the form of higher interest rates on mortgages. In essence, it’s a conduit for the home buyer to pay the bank to pay Fannie and Freddie to pay the Treasury to pay for the tax credit. Only in Washington…
As if that in and of itself wasn’t bad enough it looks to most experts that in-so-doing this tax will also, inadvertently or on purpose, back-door a government takeover of Fannie and Freddie through “pay for”
Concern: GSE “pay-for” in payroll tax cut extension bill – raises $30-40bn by making Fannie and Freddie Mac charge higher G-fees and send the extra revenue directly to the Treasury (i.e. a direct tax, even if the bill doesn’t call it that)
Problem: This ties Fannie Mae and Freddie Mac to the US government budget for up to 40 years (10 years of higher fees charged on mortgages that run up to 30 years beyond that) to cover just two months of payroll tax cut extension. (Senate: covers whole 2 months planned; House: covers part of 1 year planned)
Big picture implications not appreciated:
1. Republicans say they want to fix mortgage finance and end the “GSE model” where gains are privatized and losses are dumped on taxpayers. This prevents that from happening, as Congress will not restructure the entities if it has to “undo” a direct source of revenue.
2. In fact, this goes in the other direction – Fannie Mae and Freddie Mac become part of the government – they are nationalized – as the taxpayer will be on the hook for future losses as the companies can’t generate reserves to cover losses when mortgage borrowers default.
3. This guts the conservatorship now in place, taking value away from the enterprises that belongs to the various stakeholders. The largest stakeholder is the US government as holder of the senior preferred stock.
4. Sets bad precedent – this is like Congress taking money out of the FDIC deposit insurance fund to cover other expenses and not losses to bank depositors.
5. If Fannie Mae and Freddie Mac become arms of the government as a result of this tax, there is a risk they could be consolidated on the government’s balance sheet and their debt could blow the debt ceiling.
Conclusion: To us it makes sense to reform and re-privatize Fannie Mae and Freddie Mac so they lose their government sponsorship and the taxpayer gets paid back. You don’t to agree with this conclusion now, but if this provision goes into effect it prevents that from happening for a very long time.
[list type="tick"] [li]
- Congress will not restructure the entities if it has to “undo” a direct source of revenue; in past experience, tax increases become permanent fixtures of the fiscal landscape
- Effectively perpetuates the conservatorship, draining financial resources from the entities and making it less likely the government will get paid back its invested capital
- Increases “left pocket to right pocket” accounting game where the government is forced to buy new senior preferred stock to pay dividends on previously invested capital
- Keeps the housing market in limbo as important sources of mortgage finance would be left un-restructured and in government hands
Sorry, I missed the Obama visit to Las Vegas this week. It’s a busy week for me. I’ve gotta short-sell my house and doing all the paperwork and the move, along with my job has me sort of tied up.
Mind you, I’m not complaining, not complaining about the move—I just think it’s a bit disingenuous for the President of the United States of America to bring his private jet here that we all pay for (while saying he hates private jets that people buy for themselves,) while also saying people should not go to Vegas and spend their money. He actually said it twice. I guess I take it personal when so many of my friends have had their lives turned upside down by this economic collapse, while the POTUS singles out one city to attack, then comes here acting like he never said what he said. Steve Jobs was not the only person with a “Reality Distortion Field.”
While the media gloats over his new 5 point plan to save homes from going into foreclosure, the city I live in has turned into Detroit with Neon Lights. Please, stay away. Has government not already done enough damage? Excuse me if I don’t like the same people who caused this mess, working to try to fix it.
I work in marketing with NFL teams right now and have covered and followed sports my entire life. I know that the first thing NFL coaches do after a game is go over tape to see what happened. Win or lose, they are pouring over those tapes frame by frame to see why things happened the way they did on the field. It’s critical they do this to try to prevent mistakes for next weeks game.
What Obama and the media have totally ignored (intentionally) is why the housing market in Las Vegas, and elsewhere, has collapsed. Let’s look at the tape.
The Federal government changed the rules on how the banks loaned money for homes because they wanted more people to own homes. “Affordable housing” is what it was called. Democrats like Barney Frank and Chris Dodd were the main instigators of this, but some Republicans were there as well. They rewarded banks for making these loans to people who never would’ve qualified under the old rules—and through Fannie Mae and Freddie Mac they even guaranteed the loans. The banks didn’t change these rules, government did. The banks would’ve never made these insane loans unless government encouraged them to do so, and in many cases, even “guaranteed” these loans with our dollars.
There it is. We have looked at the tape.
The media is working hard to ignore “the tape” of why this collapse of the economy happened, and in many cases, they just flat out change the tape and make up a new story, blaming the banks. They hear Obama/Biden/Dems say it, so like good parrots, they repeat it. Democrat Senators like Durbin and Schumer have basically called for “runs” on the banks. Ask B of A and IndyMac about that. Now, you have Occupy Freak Street marching on the banks. Look at the tape.
This column will be a short one—usually I write much more and get long winded—but this is a busy week for me, maybe I’ll catch part of Obama’s visit to Las Vegas on the news while I’m packing—but then again, maybe not. I already know what I’ll see.
From Hot Air:
The CBO has a problem with the Office of Management and Budget’s calculation on the cost of the Fannie Mae/Freddie Mac bailouts, and it’s no small calculation error. OMB has calculated the costs of the bailout at $130 billion, a number repeated on occasion by the Obama administration. By the CBO’s calculation, the cost of the bailouts reaches $317 billion, more than twice the White House estimate:
In a report delivered to the House Budget Committee on June 2, the CBO said a “fair value” accounting of guaranteeing the two defunct mortgage companies – known as Government Sponsored Enterprises (GSEs) – was more than twice as high as the Office of Management and Budget had accounted for.
“Specifically, CBO treats the mortgages guaranteed each year by the two GSEs as new guarantee obligations of the federal government,” the CBO report said. “For those guarantees, CBO’s projections of budget outlays equal the estimated federal subsidies inherent in the commitments at the time they are made.”
“In contrast, the Administration’s Office of Management and Budget continues to treat Fannie Mae and Freddie Mac as nongovernmental entities for budgetary purposes, and thus outside the budget,” the report stated. “It records as outlays the amount of the net cash payments provided by the Treasury to the GSEs.”
The total of those cash payments is $130 billion, and is normally reported as the cost of the bailout of the GSEs to date. However, the CBO said that merely counting the cash payments, and not the cost of federal subsidies granted to the GSEs, obscures their real costs.
Essentially, the CBO is accounting for the cost of the federal government guaranteeing the loans bought and securitized by the GSEs.
From Market Watch:
Rep. Chaffetz seeks more transparency from Fannie and Freddie
WASHINGTON (MarketWatch) — The regulator for government seized mortgage giants Fannie Mae and Freddie Mac on Wednesday afternoon took issue with a Republican bill that would subject the two firms to new Freedom of Information Act transparency.
The bill, introduced by Rep. Jason Chaffetz, Republican of Utah, as part of a new bundle of seven bills released on May 13 would apply FOIA to Fannie and Freddie while they are under government conservatorship.
The two companies became saddled with toxic mortgages and were nationalized at the peak of the financial crisis in 2008 to avoid losses and stem the credit contagion. As of October, Fannie and Freddie have cost taxpayers roughly $151 billion in taxpayer funds, used to cover their losses, with more losses expected on the horizon.
Chaffetz said the two firms should be subject to FOIA — which provides for the public disclosure of information held by government agencies — because they are “essentially government companies.” He said they are chartered by the government, managed by board members chosen by the federal government and for almost three years have been under government conservatorship.
Over $150 Billion in Bailout Money. Over $141 Billion in Losses. Over $33.9 Million in Salaries and Bonuses in 2010 Alone. All in all, not a bad year for the top 11 executives at Fannie Mae & Freddie Mac.
Republicans are working the break the pattern of bailouts, waste, & lavish bonuses on the taxpayer dime.