We’ve been doing articles on this for the past couple of years to tell everyone that the second housing bubble is being forced on the American taxpayers in the name of civil rights. Did we not learn from the first time around that lending to risky people is NOT a good idea no matter what color they are!This really is the definition of insanity – doing the same thing over and over and getting the same BAD results. The only thing is THIS IS YOUR MONEY THAT THE GOVERNMENT IS THROWING DOWN THE TOILET!
If you need federal subsidies to pay your apartment rent, it’s a good bet you can’t afford to buy a new home. But don’t tell that to the Obama regime. It’s pressuring banks to lend even to Section 8 voucher recipients.
In a new regulatory bulletin, the Consumer Financial Protection Bureau warns home lenders that they can be investigated for discrimination if they reject Section 8 vouchers as a valid source of income for low-income minorities applying for mortgages.
The agency argues that underwriting policies that exclude such welfare payments could have a “disparate impact” on minority borrowers and therefore violate civil-rights laws.
“The bureau has become aware of one or more institutions excluding or refusing to consider income derived from the Section 8 HCV Homeownership Program during mortgage loan application and underwriting processes,” the three-page bulletin said.
Explained CFPB Director Richard Cordray, “Consumers should not be put at a disadvantage just because they receive public assistance.” And strapping them with 30-year debt doesn’t put them at a disadvantage? Did Cordray snooze through the subprime crisis?
The Homeownership Voucher Program is a Clinton-era program that Obama has expanded. Under it, HUD (that is, you — the taxpayer) helps Sec. 8 recipients make monthly mortgage payments while also subsidizing other homeownership expenses for up to 15 years.
The program is geared toward single moms who want to buy their first home. They have to earn at least $14,500 to qualify for the generous stipend, but if they receive Social Security Disability Insurance (SSDI) payments, there is no minimum income requirement.
The only other requirement is they have to take a free, three-hour “homebuyer education” class prior to closing the loan. That’s right, CFPB expects lenders to bank on the notion that a little financial counseling will turn welfare recipients into a low-risk homebuyers.
Last year, the agency warned lenders that they also face race-bias lawsuits if they verify the income of minority borrowers on SSDI benefits.
SSDI enrollment has exploded under Obama, and fraud is rampant in the program. A recent probe by Congress found doctors rubber-stamping claims under the program. A random review found that more than one in four cases failed to provide evidence to support claims.
No wonder mortgage lenders have been asking for verification.
Buried in the fine print of its new Qualified Mortgage rule, which the media erroneously claim is “strict,” CFPB actually mandates that payments from “government assistance programs are acceptable” forms of income for home-loan qualification.
But don’t stop there….
CFPB has teamed up with the Justice Department to order the biggest mortgage lenders in the country, including Wells Fargo and Bank of America, to offer loans to people on “public assistance.” The government is now requiring them to post branch notices promoting the risky welfare acceptance policy.
A mortgage requires a stable job and good income — as well as good credit — to avoid defaults and foreclosures. Though President Obama worries about declining home-buying among jobless or underemployed minorities, he’s just setting them up for failure all over again by putting them in homes that they can’t afford.
ANOTHER GREAT ARTICLE AND SOURCE FOR THE BACKSTORY ON THIS MESS:
CFPB also has been working closely with the Justice Department to enhance fair lending enforcement. Justice has pressured banks to relax their mortgage underwriting standards and approve loans for minorities with poor credit as part of a new crackdown on alleged discrimination, court documents show.
Attorney General Eric Holder, who served as Reno’s deputy, has filed a record number of fair-lending enforcement actions against lenders. More than 60 investigations are active or said to be in the pipeline, and dozens of banks have already settled, including giants Wells Fargo and Bank of America.
Prosecutions have already generated more than $550 million in rebates, loan set-asides and other subsidies from banks that have settled out of court rather than battle the federal government and risk being branded racist by the media.
Leading the charge is Holder’s top civil-rights cop, Thomas Perez, another Clinton retread. Perez has compared bankers to Klansmen, arguing that while bankers may discriminate “with a smile” and “fine print,” it’s “every bit as destructive as the cross burned in a neighborhood.”
He says predatory lenders must now “repair some of the damage done to (minority) communities.”
Read More: IBD