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Senate gives money to rich people. Where’s the #OWS outrage

By: Soren Dayton (Diary)  |  October 21st, 2011 at 03:29 PM  | 

RESIZE: AAA

Today the Senate voted for an amendment to give a subsidy to rich people. Not the first time, and it won’t be the last time. But is a perfect microcosm of today’s politics and the politics that got us into the housing crisis. Next time any of the Senate Democrats say anything about “Occupy Wall Street”, they should get asked a simple question: if you are so worried about the 99%, why are you subsidizing housing for the wealthy.

Here’s what happened. Senators Bob Menendez and Chuck Schumer, who represent rich Democrats in New Jersey and New York respectively, offered an amendment to raise the amount of a mortgage that Fannie Mae and Freddie Mac will backstop. The level that was backstopped by Fannie and Freddie was lowered to $620k, but they raised it again to $729k. So the government will offer a loan guarantee so that people can buy a $720k house. From Bloomberg:

The U.S. Senate adopted a measure that would raise the maximum size of a home loan backed by mortgage companies Fannie Mae, Freddie Mac and the Federal Housing Administration to $729,750.

Senator Robert Menendez, a New Jersey Democrat, offered the increase as an amendment to a spending bill today. The measure was approved less than a month after the limit on so-called conforming loans was automatically reduced to $625,500.

Now in the lefty narrative is that Republicans vote themselves more power and more money, but that’s not what happened here. There were 31 votes against this upper-middle class subsidy. All Republicans. Every Democrat voted for more federal money for rich people.

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COMMENTS

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  • oldbird77

    . . . maybe the government should stay out of the private home buying equation all together.

  • WarEagle01

    if that money was instead used to hire more police officers. Why do the Democrats want more rape? Do they hate women?

  • jen0517

    voted for this without even looking at the roll call vote:

    the Bobsy twins from Maine
    Disappointment Brown from Mass
    Shameless Chambliss
    Grahamnesty

    who did I leave out?

    • Soren Dayton

      Burr was present. (huh?)

      Blunt and Murkowski

  • johnt

    then when prices are dropping through the floor. Somebody is shoveling cash under the table on this one, and as always Democrats go the opposite direction of anything normal.

  • YnotNOW

    the defaults caused by their affirmative-action-for-poor-homebuyers underwriting. They need the “rich” to pay their fair share (and bail out the irresponsible others).

    • ceili_dancer

      If the loan is more than 80% of the value, there is a mortgage insurance that is also tacked on to the monthly payment. If the FHA amount is increased the borrower can put 3% down and still get a ridiculously low rate of interest and the loan would be backed up by FHA. Some conventional products are available down to 3.5%. This means you can put down less on a home and get more home. The PMI is computed on the loan amount and continues until; they get to an 80% LTV. The higher premiums would go into a pot and subsidize the lower income mortgages. The real rich are buying with cash which has a premium when negotiating the contract.

  • lorendd

    You have not properly researched your article. People who can afford $750,000 for a home also qualify under some circumstances, for HUD Affordable Housing loans(!) They are not automatically “rich”. According to HUD, in some areas of the country you qualify for Affordable Housing Loans if you make a whopping $150,800 with certain qualifications.

    If you make $136,890 per year and you have a $112,500 down payment (or sometimes less), you can buy a $750,000 home.

    Using historically low fixed 30 year mortgage interest rates of say, 5%, lets figure out the monthly payment on a $750,000 home using an 85% Loan to Value Loan: The Loan Principal amount $637,500.
    The Down payment is $112,500.
    The monthly Payment is about $3,422.34.

    Assuming the lender says you can only use 30% of your income for the payment, use the add-on method to figure your required monthly income of $11,407 per month or $136,890 per year. Not a rich person’s salary in most areas of the US.

    Lets get to the bottom line. The higher the limits for Fannie/Freddie loan backing, the better. It helps the housing market, and that is//was/has been a significant part of our economy. People who borrow at that level probably default less than at lower home value levels. This might possibly be a more worthy subject for an article if you research it.

    • daniel22

      but perception is reality in politics. We bailed out the banks, Wall St. etc, including Freddie and Fannie. This just looks like a twofer. Boost homebuying and possibly homebuilders and ease up some potential losses for banks. The problem comes when we ( mean the program) runs out of money. We still have a hole but at least the election will be over. By the way the higher the loan the greater the loss that we take.

      • superrooter

        Hey Daniel, if you look at Lorens DD (daddy) only three posts in the last 3 mos. of history on RedState, you will find on his comments the diary post of (HayStack)…, oh the memories. I started to comment as you just did, because I felt the same way. But, then I realized after re-reading HayStacks post on 8-15-11 explained in detail just how the beaurocrats (especially Democrats) fill up every bill that comes through the Senate w/pork beyond all comprehension, then commence to blame somebody else (especially Republicans) you can see that lorensDD only want’s us here at RedState to “QUIT” just “QUIT” >>>ok I got that. Think he’s just trolling around in fear or something. Not really fishing for the truth.

  • siquijorisland

    “Politicians can solve almost any problem — usually by creating a bigger problem. But, so long as the voters are aware of the problem that the politicians have solved, and unaware of the bigger problems they have created, political “solutions” are a political success.?
    IS THIS NOT CORRECT OBAMA?