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  • Comment Detail

  • Date: 05/14/24
    First Name: Joseph
    Last Name: Wahlker
    Organization: N/A
    City: Sarasota
    State: N/A
    Attachment: N/A
    Number: 2024-N-5

  • Comment

    I am a retired recovering economist. I'll include brief bullets to express my thoughts on this.

    1) Who does this really help. Surely homeowners. But in the short term. The homeowners will spend money but in the very near future they will spend it all and they will be back in debt once again. It will help banks in the long term. They have lost the ability to loan money recently except for credit card expenditures. This will be a windfall for them. But with no skin in the game. Look to 2008 and see what happened when the banks had no skin in the game.

    2) FHFA missión is to expand home ownership. This does not do that. It does not add any inventory to the housing stock. It keeps housing stock static. IF the home owner actually improves his property, they will remain in the house. If they don't improve their property and buy BMW's that does nothing to the housing stock. In addition, it does not create local jobs for local construction workers.

    3) We are stuck in a hard inflation. Caused by massive government spending. Adding more fuel to the fire is not wise. And this will add about $2T to $4T into the economy rapidly.

    4) The FHFA does not have the statute to do this. It will end up in the courts and probably will stopped there.

    5). 80% LTV is a moving target. It changes with the business cycle. Remember 2005, 2006, 2007. 80/20 was working. 80/20 LTV changed dramatically in 2008 and going forward for about five years. People walked away from their homes because 80/20 was not working for them anymore. In other words they were under water.

    6). GSE's do not have the capital to back these new loans. They do not have the capital to back their current loans. They are dangerously low in capital to back up their current "book of business". This is just plain reckless to consider something like this now.

    7). How did this proposal ever see the light of day? Who is backing this? The big winners here are the Banks. Individual home owners get crumbs but, in the aggregate, Banks make a windfall with no investment and no skin in the game. These are the same organizations who walked away from a mess they created. These are the organizations that are now fighting the federal government to keep their reserves low so they can lend more money. From their perspective they are doing the right ting. It is their freedom to do that. But if the bottom falls out again they will not have sufficient reserves to cover losses and will ask for a bail out a second time. The wolf has freedom in the wild. But the sheep only see death. I'll leave with one final thought. In the USA there are only three constants. Death, Taxes and Bank Bailouts. Lets not do 2008 one more time.