Monday Morning Cup of Coffee: What GOP control means for housing

Affordable housing minefields, getting an FHA loan, and more

November 10, 2014

Monday Morning Cup of Coffee takes a look at news crossing HousingWire’s weekend desk, with more coverage to come on bigger issues.

The morning after the midterm election and the historic sweep of Democrats out of office and power, HousingWire gave readers at least one take on what the new GOP majority in both houses of Congress will mean for housing, for Fannie Mae and for Freddie Mac.

On Sunday the National Association of Realtorsweighed in with the analysis of two speakers at the NAR convention and expo on Saturday.

Speaking at the NAR event, Mark Halperin and John Heilemann, co-authors of Double Down: Game Change 2012, seemed to agree with HousingWire’s take that not much will be coming until after Obama is out of office.

“House Speaker John Boehner’s historic majority will be more conservative than any other Republican Congress in the history of the Republic. The polarization of politics is the context of everything going forward,” said Heilemann.

Both speakers were skeptical that any major legislation will pass in the next two years, especially when it comes to housing policy, which is a divided issue on Capitol Hill. “There are people in Congress who think there should be no role for the government in the housing market. That makes it really hard to do anything on housing,” said Halperin.

Halperin said that neither President Obama nor the conservative Republicans are going to want to compromise on their key principles, and only time will tell if either will relent.

“As of now, President Obama is a spent political force, which is a real turnaround from Obama as a candidate, who was seen as someone with huge possibility. The president is now a more polarizing figure than former Presidents Bill Clinton or George W. Bush,” Halperin told Realtors.

Or, as Compass Point Research & Trading put it, “We expect the GSE reform conversation to return to Capitol Hill in the next Congress but doubt that there will be substantive progress. Our sense is that the Senate Banking Committee will focus on other legislative priorities and the House Financial Services Committee remains unlikely to compromise.”

Speaking of politics, opinion over at ZeroHedge is that Republicans are really unhappy with Federal Housing Finance Agency Director Mel Watt’s push for allowing bad creditors to buy houses with as little as 3% down.

They fear that Watt’s idea of “affordable housing mandate” is the same thing that led the industry down the path to irresponsible lending in the name of homeownership uber alles.

To wit:

When we commented on Mel Watt’s Einsteinianly-insane plans to reform FHFA, allowing bad creditors to buy houses (again) with only 3% down-payments (again), we expected nothing but echoes as the “it’s everyone’s ‘right’ to own a home”-meme gets played out for all to see in this goldfish-like societal memory that has entirely lobotomized the actions (and impact) of when this idiocy was trued before. However, a funny thing happened this week… called an ‘election’. And The Republicans have been quick to take note of Obama-appointee Mel Watt’s (replacing acting director Ed Demarco – who had some less-politik plans for real reform) plans with House Financial Services Committee Chairman Jeb Hensarling exclaiming he was “extremely concerned,” about Watt’s “efforts to force taxpayers to back high-risk mortgages with ultra-low down payments,” concluding this plan “must be rejected.”

In non-political news, ever wonder exactly what you need to do to get an FHA loan? Wonder no more, courtesy

Probably good to know since now one in every five new home loans is backed by the FHA, and it’s only increasing.

Perhaps what’s worrying those Republicans is the reemergence, on a much smaller scale than pre-crisis, of alternative mortgage options, including ARMS, piggybacks, teaser rates and more.

That’s not to conflate these safer, saner options that more people are taking advantage of with the road it looks like Mel Watt wants to go down – but people generally casually following the chatter could mistakenly think it’s getting all 2005 up in here again, when that’s clearly not the case.

Remember, markets and banks will be closed Tuesday for Veteran’s Day, which started to remember those who fought and died in the Great War, which ended on Nov. 11, 1918.

The somber holiday has grown to honor all veterans, past and present, living and fallen. We at HousingWire would like to say thank you to all who have served, and those who gave all.

One bank, Frontier Bank in California, was closed the week ending Nov. 7, according to the FDIC.

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