Wednesday, August 7, 2013

The Illusionist

Yesterday saw another big speech from President Obama--this one on the future of U.S. housing and the reforms he wants to make. Housing Wire's Megan Hopkins, who based on the gushy tone of her article must have a part-time gig as an Obama staffer, wrote "In a highly anticipated speech on Tuesday, President Barack Obama laid out his plan to continue moving the nation's housing forward. The president, who has been visiting towns throughout the country over the last few weeks, has focused his efforts on creating a better life for the middle class as of late."

Today, the White House featured an "Ask Obama About Housing" session until 1:00 PM EST when citizens could use social media to send the president their questions about housing. The tweets coming in using the #AskObamaHousing hashtag on Twitter were actually very funny, as disgruntled Twitter users tweeted sarcastic comments about the NSA, drones and excessive government surveillance. But very few people seem to realize that Obama's housing policies actually have serious implications for our nation.

One reason that Americans are not taking Obama's speech very seriously is that the speech itself does not really say much that is new. Obama's comments are mainly a bloviating rehash of his prior housing policy speeches--we need to make mortgages safer, we need to protect the American dream for responsible families, we need to end bailouts, etc. etc. etc. Obama's policies have led to massive failures, such as HAMP, which promised to allow 4 million Americans to stay in their homes and fell far short of that goal. Over half of the families modified under the HAMP program eventually ended up in foreclosure.

For this new round of proposals, HUD has created a chart to help Americans visualize the President's plans. He proposes winding down Fannie Mae and Freddie Mac and bringing private capital to the mortgage market. Those are both excellent suggestions. But he overlooked the important detail that Fannie Mae and Freddie Mac, which have been under government conservatorship since September of 2008, have raised part of their current capital through private capital investments and the agencies are paying back the federal treasury at the expense of these good faith investors. The problem is so serious that one hedge fund investor, Perry Capital, is actually suing the agencies to recover his investment.  Prior to being taking into conservatorship, Fannie and Freddie both were primarily private organizations with government guarantees and only 25% government ownership. Few Americans are sympathetic to hedge funds, but private investment is about risk vs. reward only, and when the government allows the private investors to be shafted they are driving away the very sources of capital that the President claims to support. 

Next, Obama promises to use "executive action" to cut through the red tape that is making it difficult for middle class families to purchase homes. That is rather funny since his Adminstration passed the Dodd Frank bill which created the red tape that has led to tighter mortgage qualifications for most families. In fact, the regulations set to take effect in January of 2014 will disqualify roughly 60% of Americans who were eligible for mortgages in 2010 from being able to buy or refinance a home. So Obama using executive order to fix a law that he and his cronies forced through Congress is a little like....using executive action to delay corporate penalties for Obamacare. It's disingenuous and probably outside the scope of his legal authority.

And speaking of Obamacare--we learned this week that 77% of the new jobs created this year are part time. As part-time work eclipses full time work because companies are trying to skirt the costs of Obamacare, fewer and fewer people are going to qualify for mortgage financing because housing finance rules treat part time employment completely different than full time employment for the purposes of qualification for a loan. When an employee works part time, his current income is not considered--rather he must have a two year history of that employment and the income must be averaged to come up with a current figure. So in the new Obama economy, a person might be working three part-time jobs for a total income of $60,000 a year and still not be able to qualify for a home mortgage even though that same person WOULD qualify were he salaried in one job for $60,000 a year. Apparently the President and his enthusiastic lackeys at HUD are hoping most "middle class" Americans don't know this.

My personal favorite of the housing initiative plan is Obama's insistence that the way to fix housing is through comprehensive immigration reform which will cause property values to increase. This is as absurd as President George W. Bush's assertion that we should put 5.5 million Americans into homes because home ownership makes Americans better citizens and better neighbors. The majority of illegal immigrants who have lived in the U.S. as undocumented immigrants do not have credit histories or provable job histories. If they have worked primarily in part time or seasonal work, even if they can document that work history they probably will not qualify to buy a home. These are major obstacles to home ownership for anyone. So we have to ask ourselves--is the President going to fix this issue through executive action also--a special path to homeownership for undocumented immigrants who can expect to jump to the front of the line to buy houses as they are now planning to jump to the front of the line to obtain citizenship?

Finally, Obama stressed that we need to increase our investment in affordable rental housing to make sure that a strong rental housing market exists for all. This is where his real interest lies. As I have written many times in this blog, Obama and his liberal allies in Congress are strong proponents of Agenda 21, Sustainable development and Smart Growth. Obama is using his second term to drive his climate change and sustainability goals forward wherever he can. Sustainable development has been the true focus of Obama's Administration--everything else is just smoke and mirrors to keep people from looking too closely at what is really happening. In June 2010, HUD's Shaun Donovan announced that HUD was launching a $100 million Sustainable Communities Regional Planning Grant to encourage communities to build using Smart Growth. In June, 2013 the HUD's Partnerships for Sustainable Communities celebrated its fourth anniversary. The Partnership is a collaboration among HUD, the EPA and the Department of Transportation which has provided $4 billion in federal funds to support "Smart Growth" projects in all 50 states, the District of Columbia, and Puerto Rico.

The real future of housing, as far as the Obama Administration is concerned, is moving people out of the suburbs and back into densely packed urban housing where residents will rely on public transportation. (And yes, for those of you making wisecracks on Twitter this morning, this housing arrangement will make it easier for both the drones and your neighbors to observe you.) Abolition of private property is a goal of Agenda 21, which requires that people live in crowded "human settlements" and that the rest of the nation be rewilded as (think national forest) in accordance with environmental justice. Interestingly, if you read the Partnership for Sustainable Communities literature, you will find the term "environmental justice" used in connection with the EPA. But President Obama cannot say any of that in a speech on housing because it would turn off the middle class voter he is trying to court for the 2014 mid-terms in the hopes of winning back the House of Representatives so that he can pass his federal climate change bill. So since he can't tell us what he really wants to do, he gives speeches that say little, promoting policies that either have already been envisioned or that have already failed. This is a partial reason that he uses a housing initiative speech to campaign for a totally unrelated policy initiative such as immigration. Obama may be a terrible president, but he's a great illusionist. Pay no attention to that man behind the curtain--HUD is doing the real work of reshaping the future of housing in the U.S. Obama is just the distraction to keep us from looking too closely while the real trick is being performed.

Not sure what Agenda 21 is or how it will affect you?   Agenda 21: Bankrupting America into Utopia, One City at a Time, explains what Agenda 21 is, what it means and what you can do to stop it.

Alexandra Swann is the author of No Regrets: How Homeschooling Earned me a Master's Degree at Age Sixteen and several other books. Her novel, The Planner, about an out of control, environmentally-driven federal government implementing Agenda 21, is available on Kindle and in paperback. For more information, visit her website at

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