Congress Supports Homes for the Wealthy Over the Poor By Daniel Indiviglio

http://www.theatlantic.com/business/archive/2011/11/congress-supports-homes-for-the-wealthy-over-the-poor/248742/

When Congress allowed the conforming mortgage limit to decline slightly to $625,500 in October from $729,750, it was an important test. Could the private market step back in and take on this small portion of mortgage risk? The test was short-lived. This week, Congress reinstated the higher limit for loans guaranteed by the Federal Housing Authority. To make matters stranger, it simultaneously cut funding to build and renovate housing projects for the poor.

Lending Very Wealthy First-Time Homeowners a Helping Hand

Let's start with the conforming limit news. In fact, Congress did not raise the conforming limit for loans that Fannie Mae and Freddie Mac can buy or guarantee. It only raised the limit for FHA loan guarantees. This is a very odd move.

The FHA exists to help first-time home buyers and those on the cusp of being able to afford to buy a home. It does this by allowing borrowers to make very low down payments along with the purchase of mortgage insurance. This is distinct from Fannie and Freddie, which exist more to provide market liquidity.

Think about the implications for the mortgages we're talking about here -- those between $625,500 and $729,750. What first-time home-buyer needs a low down payment for a loan that big? If the goal is to make housing more affordable, then surely a first-time buyer could just aim for a more affordable home to begin with. Even in high-cost areas, starter-homes can be found for less than $650,000 (about the maximum cost of a home with an FHA guarantee before the higher limit was reinstated).

But price is varied by locations. For example, in NYC some one bedroom apartments will cost $2500 a month, depending upon the location of the apartment. So that is one thing the article fails to mention.

But if you can afford a home like that, you generally don't really need a load from the government to help you. You can make the down payment yourself.

Government for the people and by the people. Sometimes I really wonder if that's really true with the huge amount of money that influences our government.

I wish our forefathers had the foresight to keep corporations and the wealthy elite out of politics.

... was invented after the founding fathers founded. As well regret they had not the insight to regulate the Internet.

As for keeping out the wealthy elite from politics, the founding fathers were the wealthy elite, they could hardly be expected to exclude themselves from government when the whole point of the revolution was to place themselves in power.

-- Mal