Benjamin Franklin wrote that “in this world nothing can be said to be certain, except death and taxes.” Were he alive today, Franklin might add to the list corruption in federal housing programs.
While the Department of Housing and Urban Development is the federal agency responsible for most housing subsidies, the departments of Veterans Affairs and Agriculture also subsidize homeownership. In fact, despite the problems caused by federal policies to put people in homes with little skin in the game, the VA and USDA continue to facilitate zero-downpayment mortgages.
The Department of Housing and Urban Development’s Inspector General released a stack of almost 20 audits late last week. Although the reports aren’t earth-shattering, the fact that almost every audit found problems was a striking reminder of the bureaucratic bungling that comes with government programs, particularly at HUD.
Federal Housing Finance Agency director Edward DeMarco testified to the House Financial Services Committee this week on the state of Fannie Mae and Freddie Mac, which are currently under FHFA conservatorship.
The administration underestimated the magnitude of the economic imbalances that spawned the recession, and overestimated the government’s ability to quickly right the ship. Despite the Obama administration’s massive economic interventions, unemployment remains high and the economy is still sluggish. The administration has been defending itself by claiming that its actions prevented a worse recession or even a depression.
The Treasury Department and Department of Housing and Urban Development held a high-profile conference this week on the “Future of Mortgage Finance.” The federal government is currently backing more than 90 percent of new mortgages through Fannie Mae, Freddie Mac, and the Federal Housing Administration.
A new Department of Housing and Urban Development’s inspector general report finds that the agency initially required, and then “encouraged,” recipients of HUD stimulus funds to post signs indentifying projects as being funded by the Recovery Act. In other words, HUD pushed recipients to engage in political advertising, and to do it with taxpayer funds.
The city of Bell, CA recently made national headlines when it came to light that city officials have been receiving massive six-figure salaries. Bell taxpayers were so irate that police in riot gear were required to maintain control at a recent city council meeting.
The Department of Housing and Urban Development is pushing legislation that would enable public housing projects to access private financing. Due to limits on how much of a tenant’s income can be used for rent, public housing authorities have been reliant on billions of dollars in annual federal operating and capital subsidies.
When the 2008 economic stimulus bill created an $8,000 homebuyer tax credit to prop up the ailing housing market, the outcome was predictable: fraud and economic distortions.