Robbing Hood: Trump’s 1st Day in Office Costs FHA Home Buyers $500 (On average)

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By: Reed MacMillan

The Department of Housing and Urban Development has several mission statements, including “Maintain and expand homeownership, rental housing and healthcare opportunities.” In the last quarter of 2016, home ownership increased slightly from 63.5% to 63.70%. The all time high of 69.20% was reached fin the second quarter of 2004, according to data provided by the Trading Economics website. In February of 2017, sales of new single family homes rose 6.1% for a seasonally adjusted rate of 592,000, whereas sales of previously owned homes dropped 3%. This may seem like a largely positive trend in the direction of home ownership. I do not disagree. Yet, if you look at the United States MBA Mortgage data, you will find that in March, both applications for new mortgages and refinancing fell 1.6 and 4.2% respectively.

CNBC’s Diana Olik (@DianaOlick) reported this story with the following headline, ” Trump’s first housing move tanks mortgage applications 3.2%.” To view the story click on the image below, which highlights the FHA fee cut and impact of $480/year to a buyer with a $190K mortgage. Volume was was 18 percent lower than the same week one year ago.

The report further details that there was a 13 percent drop in FHA applications, which they attribute to the Trump administration reversing a cut in the FHA’s annual mortgage insurance premium, just hours after the inauguration. Expressed succinctly by Mother Jones, “FHA loans enable homebuyers—often those with lower incomes and who have fewer assets or bad credit—to bypass conventional lenders who would likely deny them loans by taking out a mortgage that’s insured by the federal government. (Trump’s First Move as President: Screwing Over Homeowners, January 20, 2017)

To be clear, just hours after the inauguration, President Trump signed an executive order that reversed a cut in the FHA’s annual mortgage insurance, that would have decreased monthly payments for thousands of new, lower-income borrowers.  Presidential executive orders require no congressional approval to pass or overturn. Earlier this year, CNBC’s Diana Olik (@DianaOlick) reported that Obama signed this final Executive Order after after assessing that the FHA insurance fund, which had gained $44 million in reserves, could afford to pass on some of the savings to working families.
(CNBC, Obama lowers borrowing rates, claims Trump won’t reverse). Many Republicans in Congress were not happy about this, suggesting that

The mostly rural, middle-American areas that helped propel Donald Trump to victory in the presidential election, are also the areas of the country that have seen little growth in home ownership according to Laura Kusito’s (@LauraKusistoWall Street Journal’s article, Housing Gains Highlight Economic Divide. In this article, she talks about how these regions, with home prices between $100,000 -$150,000 on average, have been especially hard hit after the economic crisis of 2008, when the requirements for obtaining a mortgage became more stringent.

The National Association of Realtors article Hidden Demographics of First Time Home Buyers reveals that  the percent of first-time home buyers varies by region of the country. In the Mountain region of Montana, Idaho, Wyoming, Nevada, Utah, Arizona, Colorado, and New Mexico, all red states, first-time home buyers were only 21 percent of the total number of buyers in 2015, the lowest of any region. First-time home buyers made up 43 percent in the Middle Atlantic in New York, Pennsylvania, and New Jersey; and 42 percent in New England.

In assessing the impact of these actions on our national economy, and its economic stability, I think that you could make a case that it is risky to ease requirements for lower income and first-time home buyers. Yet, this runs counter to the mission of HUD to maintain and expand home ownership. It also runs counter to the narrative of our current President who promised the economically hardest hit new opportunities. For a President who promised to get the economy going again, it is a bit hard to understand Trump’s decision to undo the Obama-era rate reduction. It qualifies as a “Robbing Hood” because it has little effect on wealthier mortgage holders, and harms those with low incomes, middling credit scores or who have less than a 20% down payment on their homes.  Haley Sweetland Edward’s article in Time,  How Donald Trump Just Raised Many Mortgage Bills (January 2017), provides pros and cons for reversing the Executive Order. Whatever the pros are, they must be balanced against the reality of 40,000 Americans potentially losing their chance for a new home, a potential reality captured by Elizabeth Warren’s Tweet on January 20th:

“.@POTUS suspended a planned cut in FHA mortgage insurance premiums,” she tweeted on Inauguration Day, “which @nardotrealtor says will cost 40k families a shot at a new home.”

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Robbing Hood: From Average Joe to Billionaire Bob

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Dedicated to the robber in chief, leading his merry band of GOP thieves, I hereby proclaim, via the first Robbing Hood blog, a new series focused on how the GOP and 45 plan to rob from average Jane and Joe and give to Billionaire Bob!

To all the average Joe’s and Jane’s out there: watch your wallets! 45’s plan to Make America Great Again depends on the “richies” being “nice.” Ahhh yes, that’s it…all those hedge fund folks who destroyed our retirement accounts last time, who packaged up a bunch of toxic real estate assets like they were botox for the bottomline and sold them off to the banks to help the “getting by’s” buy a larger home than they probably needed. Remember the fun and frolic, when the Chinese bought our Treasuries, and credit was loose, and everyone bought more than their fair share of stuff? Oh yeah, those were the good old days of 2002-2008, before we had to pull the rip-cord and parachute to reality.

A bunch of stuff happened after that, including the formation of an organization called the Consumer Protection Agency. As stated on its website, “The FTC’s Bureau of Consumer Protection stops unfair, deceptive and fraudulent business practices by collecting complaints and conducting investigations, suing companies and people that break the law, developing rules to maintain a fair marketplace, and educating consumers and businesses about their rights and responsibilities.” Definitely something we should want to get rid of, right? Woohoo! Soon everyone can engage in the type of business practices that have distinguished 45 as one of the only “77’s” out there. What is a 77 you ask? Someone who has filed Chapter 11 7 times.

Ponder that for a moment and the possibility that we may all be headed for an “88” collectively.  But hold onto your hats you “getting by” types because you can definitely count on the “richies” and the businesses who now have full and unfettered access to fraudulent practices to do the right thing, right? I am sure they would never take advantage of or engage in practices at the expense of us pesky consumers to make extra money. Hey maybe they will even employ us and create a whole bunch of awesome jobs, right? You trust them, don’t you? So when you follow Fraulein Conway’s dictate to buy Ivanka’s stuff, because its “So great” — you will definitely be helping both Ivanka and the U.S. economy. I mean, hey, the Chinese who manufacture her clothes may even buy our Treasuries again….

You trust 45, and Fraulein Conway, and Putin, and you hate people like me. I’m the enemy – one of those crazed liberals who reads the news, believes in facts, pays my damn student loan bill ($900) a month because I went to MIT for an MBA to become an eleet.

So what does it feel like to be an “eleet?” Ah…let me count the ways. Ooops. Yes, see the thing is, my friend, — WE — yes you regular Joe, and you regular Jane, are ME. That’s right, I am regular Jane too, and I struggle to pay for that student loan and my other monthly payments, and wonder if my retirement account will crash because we certainly want to make darn sure that those Koch brothers and their industries are deregulated, and that we can pollute again, and that we can vvvvv-OUCH-erize the hell out of public education so that our billionaire baby DeVos can gut public education like she did in Michigan. Watch out for the bears!

But, I get it, its soooooooo unfair to be sooooooo mean to the Tweeter in Chief. I call bullsh*t and ask you to think about who might be taking steps, marching in the streets, blogging, and barking on your behalf?  Yes me, the liberal version of regular Jane. Oh, and did I mention that my great grand-daddy was a coal miner, and my grandpa sold spam for Hormel, and my husband is in the local carpenter’s union. His family came here from Germany after WWII. He is the opposite of eleet, and spent most of his time toiling with his body to make a living. But, hey just remember, I am a snotty liberal jerk out to get you by suggesting that fair labor practices, clean air, and regulations on business serve our purposes.

If we are headed to 88 with 45 (aka 77)…let’s try and do things bigly. Grammar is so Obama. See you at Nordstrom. That’s where the eleets like to hang out.