Editors Choice

Editors Choice: Throwback to Foreclosure and the General Election of 2016

Do not expect the Trump administration to offer relief to the more than 7 million American families still under water on their mortgages.

How America’s foreclosure crisis helped make Donald Trump President of the United States of America

Foreclosures helped put Donald Trump in the White House, and his choice for Treasury secretary, Steve Mnuchin, was in a good position to understand how.

Mnuchin, a veteran financier, bought OneWest Bank after the financial crisis and ran it for six years before his consortium sold it for a $1.5 billion profit. In that time, the bank, known as IndyMac before it was seized by federal regulators in 2008, foreclosed on some 36,000 homeowners.

Future Treasury secretary Mnuchin has already mentioned plans to privatize Fannie Mae and Freddie Mac, the government-owned mortgage finance corporations that still backstop the bulk of the US mortgage market.

But figuring out how to responsibly extricate Fannie and Freddie from the market is a Gordian knot of a policy problem that has languished in Washington, with few in either major party eager to discuss the winners and losers of such a move. Most of the discussions have revolved around long-shot efforts by Wall Street investors to seize the formerly insolvent companies’ post-crash profits, rather than letting the government recoup its investment—a strategy that appears to have received a boost given Trump’s election.

Mnuchin’s limited remarks on the topic to date suggest he is eager to wind down the two companies or eliminate them entirely, but housing finance experts across the political spectrum believe it will be difficult, if not impossible, to do without severely disrupting the market for home loans.

Even the American Enterprise Institute’s free-market plan to eliminate Fannie and Freddie depends on enacting a new, $4.5 billion annual tax subsidy to homebuyers—funded, naturally, by cutting spending on affordable housing at HUD and, less believably, by cuts in the home mortgage interest deduction.

All this suggests we shouldn’t expect the Trump administration to offer relief to the more than 7 million American families still under water on their mortgages, even if their votes helped put Trump in office.

Instead, the message about that key asset for the American middle class will likely be muddled again by the use of populist rhetoric to advance the financial sector’s goals.

Read full article

Credit: Quartz

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Editors Choice: Throwback to Foreclosure and the General Election of 2016
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Laws In Texas is a blog about the Financial Crisis and how the banks and government are colluding against the citizens and homeowners of the State of Texas and relying on a system of #FakeDocs and post-crisis legal precedents, specially created by the Court of Appeals for the Fifth Circuit to foreclose on homeowners around this great State. We are not lawyers. We do not offer legal advice. We are citizens of the State of Texas who have spent a decade in the court system in Texas and have been party to during this period to the good, the bad and the very ugly.

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