Sec 8 recpients get home loans?

H

Horn6721

Hook'em
This seems like a bad idea for us taxpayers.
from link:
"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."

I forgot Clinton started this and yes Bush continued this. Did we learn nothing from the housing bust?

more from ink:
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.

Read More At Investor's Business Daily: http://news.investors.com/ibd-editorials/051415-752725-cfpb-warns-home-lenders-dont-exclude-section-8-welfare-recipients.htm#ixzz3aE4oyDQr

Since this program has been going on so long I am sure there are studies on the failure rate.I couldn't find one but IIRC the stats from mortgages to low income people that failed ( of ALL races) back during the housing crisis were predictably high.
Why is the BO admin putting pressure on mortgage companies to make more of these loans now?

Please note I am not advocating eliminating giving rental help to those who truly need it. Those who truly need it should get housing , utilities ,medical ,food stamps and free school lunches and snacks/ dinners, cell phones, extra money for school supplies and clothes. THOSE WHO NEED IT, NOT THOSE WHO FIND A DOC TO FRAUD THE SYSTEM.

Who will end of paying for all this and with what?
 
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I'd be interested in a study of this as well.

Honestly, coming from the burbs, when I think about Section 8 housing, I keep thinking I want it far away from my neighborhood. But sometimes when you change circumstances, you change lives. The best public housing is where community members feel pride of ownership in where they live and have a role in how it is managed.

Simply put, most of us tend to think people are "bad" or "good" and behave accordingly. Some interesting sociological studies seem to indicate that given the right circumstances, almost all of us are prone to bad behavior and likewise in the right circumstances capable of good.
 
This kind of forced lending to unqualified borrowers is not the only, but certainly a BIG reason for the housing crisis. Mortgage loans are pretty easy to qualify for. FHA only requires 3.5 down and some lenders go down to 580 FICO. And allow you to have a debt to income ratio up to 43%. And most communities have other overlay programs that will help out with the 3.5% as well.

If you can't qualify under those terms, you should not be a homeowner. Owning a house requires that you have a modicum of fiscal responsibility. If you can't meet the above conditions, it is likely becuase you have a habit of spending more than you can afford or you have a habit of being out of work on an intermittent basis.

Neither of which bodes well for a long term financial commitment like a house.
 
Home loans are made based on having a steady, reliable stream of money with which to pay off the loan. That's why many small business owners or other people who have high but unstable incomes often have trouble getting a loan. My problem with this is the assumption that government benefit money is a constant, reliable stream of money with which to pay off a 30 year note. I am all for many of the benefits and think they serve our society well. The length of time people are receiving them is a different story.
 
Horn6721 said:
"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."
Click to expand...
You are reading more into this than is really there. The CFPB is not saying that lenders have to approve loans to Section 8 voucher recipients. It just says that lenders can't exclude recipients from consideration, and have to include the Section 8 vouchers as income in the application process. If the voucher isn't enough to elevate the borrower into approval status, then denial remains acceptable.

Consider two applicants for a mortgage. One has annual income of $36,000. The other has $30,000 plus a monthly $500 voucher, for a total of $36,000. All else equal, these two applicants should either both get a loan, or neither should.
 
And by the way, it is worth noting that Section 8 is a solidly conservative idea. Before section 8 was expanded (in the 1970s???), most public housing assistance was "project-based". Conservatives argued that project-based financing did not make sense for those who were only marginally poor. Instead, giving vouchers to the marginally poor would enable them to participate directly in the housing market. The free market would enable the recipients to live where they want to, and would incent developers to supply appropriate housing stock.

Allowing section 8 vouchers to be used for purchases is a natural extension of the program. If the monthly voucher is enough to bridge the gap between denial and qualification, then the vouchers can help the recipient buy a house -- so long as the seller does not discriminate.
 
NJlonghorn said:
And by the way, it is worth noting that Section 8 is a solidly conservative idea. Before section 8 was expanded (in the 1970s???), most public housing assistance was "project-based". Conservatives argued that project-based financing did not make sense for those who were only marginally poor. Instead, giving vouchers to the marginally poor would enable them to participate directly in the housing market. The free market would enable the recipients to live where they want to, and would incent developers to supply appropriate housing stock.

Allowing section 8 vouchers to be used for purchases is a natural extension of the program. If the monthly voucher is enough to bridge the gap between denial and qualification, then the vouchers can help the recipient buy a house -- so long as the seller does not discriminate.
Click to expand...

I absolutely support section 8 vouchers over projects.
 
NJ
You do realize the part you copied and took exception to is from the IBD link so take it up with them.

As a practical common sense matter IMO welfare benefits/ sec 8 vouchers should not be used to justify 30 yr mortgages. Where is the incentive to work harder longer etc to improve your earning ability when you can get a mortgage subsidized as well as subsidizing other homeownership expenses for up to 15 years on top of all the other benefits?
There is no reason to work.

If we the taxpayer make the mortgage payment and other homeowner expenses , who gets any appreciation in a house that gets sold?

NJ?
. Sounds like the BO admin IS in fact requiring the big lenders to give loans to people using our money to qualify, NOT money they earn from working.
from link
"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."

If this isn't deja vu all over again what is?
 
It won't become deja vu until these people start buying half million dollar houses based on projected entreprennurial income.
 
Croc
Won't that be another different deja vu? And yes that is stupid as well but it does not mitigate the gov't strong arming lenders to accept welfare we provide as income for purposes of mortgages.
 
NJlonghorn said:
You are reading more into this than is really there. The CFPB is not saying that lenders have to approve loans to Section 8 voucher recipients. It just says that lenders can't exclude recipients from consideration, and have to include the Section 8 vouchers as income in the application process. If the voucher isn't enough to elevate the borrower into approval status, then denial remains acceptable.

Consider two applicants for a mortgage. One has annual income of $36,000. The other has $30,000 plus a monthly $500 voucher, for a total of $36,000. All else equal, these two applicants should either both get a loan, or neither should.
Click to expand...

Totally disagree. If you need someone else to support you, the bank should not be required to loan you money long term. As someone else stated, much of the financial crisis was a result of banks lending to people who could not afford the over valued home or for bogus second mortgages.
 
I agree with NJ. The CFPB is only requiring the Section 8 voucher to be deemed income in the credit evaluation. It's not a blanket instruction to give loans to Section 8 voucher recipients regardless of their credit worthiness.

Larry expresses concern that the voucher would be considered a permanent fixture in the income determination. That's true, but don't lenders take risks when they consider other sources of income to be permanent fixtures? As a school district employee, your job is about as close to a permanent fixture as it gets, but most people are at-will employees who could get ****-canned at anytime. I used my income as a lawyer to get a mortgage, but what sort of guarantee was there that I'd keep making money the way I did when I applied for the loan? Absolutely none. I could have gotten fired or even disbarred. Either one would have dramatically increased the likelihood that I would have been unable to make my payments.

In a way, the Section 8 voucher should be a preferred source of income. Using NJ's numbers, suppose I make $36K per year working at a job. I might be able to make a small mortgage payment, but I don't have to. I could take that $36K and buy dope with it. The bank is taking the risk that I'll choose to make my house payment with that money. However, under the Section 8 voucher program, nobody is giving me cash that I can go spend anyway I want. The creditor or landlord can get paid directly. He essentially has a de facto lien on that portion of the debtor's income.

I get the argument against doing it, which is essentially that a welfare recipient should be deemed per se too irresponsible to get a loan. If he is, odds are he'll exclude himself from qualifying for the loan for other reasons.

Also, this has little to do with making risky loans and the housing crisis. The overall threshold for credit worthiness isn't being changed.
 
MrD
Did you read this part on the IBD article?
"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.

ORDER, not suggest and OFFER, not accept applications for consideration. If you think lenders are able to look at public assistance applicants the same they do people who work you are not paying attention .
WE will pay the largest portion ( 70%) mortgage as well as other expenses including down payment assistance, insurance, utilities, routine maintenance and repair and major repair.
We pay the costs of this for 15 years.
What incentive is there to work harder and make more money?
Shouldn't the purpose of any assistance be to give a hand as the person works hard to move OUT of assistance? Note there will be those who can not move away from aid. Those should get the rental assistance etc for as long as needed.
 
"The Homeownership Voucher Program is a Clinton-era program that Obama has expanded. "

H6721, I understand your concerns, but that article is a hack job.
 
Why is the BO admin putting pressure on mortgage companies to make more of these loans now?
Click to expand...

This is nothing new. When the current Sec. of Labor, Thomas Perez, was Asst. Attorney General back in Obama's first term, he began extorting money from banks, using statistical analysis to accuse banks of discriminatory lending practices. It didn't matter if the bank had loaned to every minority who applied, if their minority loan holder percentage was less than the percent of minorities in the immediate area, they were, by definition, guilty of discriminatory lending practices. Most banks quietly paid a "fine" to settle the lawsuit. It was just a wealth distribution program, which is what this sounds like too.
 
What a crock. My taxes are paying for somebody's mortgage? I never even thought that was a possibility. If that is the case, then perhaps the law should stipulate the section 8 home mortgage payments may only be used in Detroit or other blighted areas. You know, to reestablish blighted areas and keep the bums out of neighborhoods that have homeowners that worked, earned money and paid for their homes.
 
H6721, if you just read the article as a piece of journalism you would see it is crap. It sounds like an 8th grader wrote it. Not to mention, he's losing his **** over fair lending laws that have been on the books since the 1970s.
 
Chango
Yes absolutely we should help provide shelter for those who truly need it and availability should be based need.

?? Did you read the OT and /or link?
NO this program has NOT been around since the 70's
We should not be paying closing costs, mortgages, insurance and upkeep for people to buy homes.
 
Horn6721 said:
MrD
Did you read this part on the IBD article?
"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.
Click to expand...

Yes, I read the article, including this part. This "article" is an opinion editorial with an agenda, not an informative article. It's pretty short on facts and specifics and high on political rhetoric and smack talk. I seriously doubt that DOJ actually issued a blanket order mandating banks to make loans to people on public assistance. If it did, that would be a huge story, and of course, it would be the subject of very high-profile litigation (that would end with the government losing). What it sounds like is that DOJ is ordering these banks not to discriminate against borrowers on the basis that they receive public assistance, which is different scenario. Why? Because it doesn't remove credit scoring as the predominant consideration, as it is for all debtors.

Horn6721 said:
ORDER, not suggest and OFFER, not accept applications for consideration. If you think lenders are able to look at public assistance applicants the same they do people who work you are not paying attention .
WE will pay the largest portion ( 70%) mortgage as well as other expenses including down payment assistance, insurance, utilities, routine maintenance and repair and major repair.
We pay the costs of this for 15 years.
Click to expand...

That may be true, but that's the nature of public housing and public assistance in general. The taxpayer provides money for people who (allegedly) cannot secure housing on their own. If we're going to provide that money anyway, then what does it matter if they use it to pay a mortgage rather than rent? Personally, I'd rather have a few people on public assistance who own their own homes peppered throughout a city rather than concentrated into some dumpy low rent ******** apartment complex where they congregate and ruin the neighborhood.

Horn6721 said:
What incentive is there to work harder and make more money?
Shouldn't the purpose of any assistance be to give a hand as the person works hard to move OUT of assistance? Note there will be those who can not move away from aid. Those should get the rental assistance etc for as long as needed.
Click to expand...

The incentive problem is there either way, but it could be worse with rental assistance. To my knowledge, you can get rental assistance indefinitely. However, if you get mortgage assistance with the voucher, the assistance ends after 15 years. That's going to be a better deal for the taxpayer and the recipient.

Finally, bear in mind a couple of things. First, the banking industry is one of the most powerful special interests in the United States, and their scope is national (as opposed to industries like coal and natural gas that are very powerful in some places but not so much in other places). They are balls-deep in 90 percent of Republicans (basically everybody except the Ron Paul people) and about 70 percent of Democrats (including the Obama Administration). That's why they get a colossal bailout with bipartisan support when they get into trouble, while individuals and other less powerful interests get bankruptcy court. If they really want to stop a law, they can do it pretty effortlessly. This thing is happening with their acquiescence. They may not want it, but they aren't concerned enough about it to make a significant fight out of it.

Second, when you hope in the sack with government as the banking industry has been since the New Deal (and to a lesser extent since Day 1), there's a price to pay and there should be (speaking of incentives). You lose some of your business prerogatives. If you take a bailout, then I have no sympathy for you when the taxpayer wants to tell you how to make loans. If you want to make loans on your terms, then don't take bailouts, and pay to privately insure your own depositors.
 
MrD
We will just disagree on this. I see nothing good for taxpayers from this.
You think it is a good thing for taxpayers to subsidize people for mortgages and costs for 15 years.
Who helps the people paying taxes who can't afford to own a home?
Do you think at the end of 15 years these people who have b een sponging off the gov't will magically be able to take over the mortgage and costs?? I hope you don't think that people will all of a sudden turn responsible. Note I do not include people with genuine need. I speak of the people who game us( people of all races)

Here is the hed of the CTFB
"CFPB Director Richard Cordray asserted that “placing ability to repay ahead of need is contrary to federal regulations. Just because a person cannot support himself or herself doesn’t mean he or she should be excluded from the benefits of home ownership. Every person has an inalienable right to own a home. Lenders have a moral obligation to help people achieve this right.”

“For banks to argue that the risks of default and foreclosure should preclude certain persons from obtaining loans places profit over social justice,” Cordray said. “Those who attempt to implement such injustice will face consequences. Fines or even imprisonment await anyone who would defy us in this matter.”


more at limk. it is astounding, or should be to people who think there is better use of our taxpayer money.
http://azconservative.org/2015/05/16/feds-warn-lenders-not-to-deny-loans-to-welfare-recipients/


 
That isn't real. Its satire.

Feds Warn Lenders Not to Deny Loans to Welfare Recipients
Posted on May 16, 2015 | Leave a comment
By John Semmens – Semi-News — A Satirical Look at Recent News

I think you're a good guy, and you always make it clear that you believe those in need should get help. The idea of people working the system for a few hundred (or even thousand) bucks here and there really seems to piss you off (and others - IvanDiablo and Clean come to mind).

I wonder what you all think about those that rob the goverment (and your tax dollars) to the tune of tens of millions. You never seem to comment or post about those guys.
 
I meant to copy and post this remark from the CTFB
"Cordray went on to question “whether requiring loans to be repaid even makes sense. Housing costs would be lower across-the-board if the burden of repayment could be lifted from those unable to afford it. Banks have billions of dollars and could easily absorb the losses from non-performing loans. If they should become insolvent the Federal Reserve would, as it has in the past, just create more money to bail them out.”
 
I know but it is an example of a real hack job
and it got you going. :smokin:
The OT link IS REAL.
To your point if you want to start a thread on big companies/ banks etc frauding the gov't for millions. please do. Maybe start with Solyndra.
 
Horn6721 said:
To your point if you want to start a thread on big companies/ banks etc frauding the gov't for millions. please do. Maybe start with Solyndra.
Click to expand...

Careful. You're reinforcing the sterotype that the only fraud the right cares about is liberal donor fraud. You can start with the banking industry to find 10's of billions of tax payer funded "fraud". I put "fraud" in quotes because it's legally sanctioned economic ill-gotten gains just like Solyndra.

With that said, it's a fine line between government boosts to industry and economic cronyism.
 
Husker
I agree. it is a tiny fine line. Both sides are guilty.
and is perhaps something someone should start a thread to discuss
That does not mean that this idea, as outlined in OT should not be discussed.
 
Horn6721 said:
MrD
We will just disagree on this. I see nothing good for taxpayers from this.
You think it is a good thing for taxpayers to subsidize people for mortgages and costs for 15 years.
Click to expand...

The housing voucher lasts for 15 years. The rental subsidy lasts indefinitely. If you give a single mom $1,000.00 per month for 15 years, that costs you $180K. If you give her $1,000.00 in rent until the day she dies (could be 50 years), it costs you $600K. How can you not see the benefit in choosing the housing voucher?

Horn6721 said:
Do you think at the end of 15 years these people who have b een sponging off the gov't will magically be able to take over the mortgage and costs?? I hope you don't think that people will all of a sudden turn responsible.
Click to expand...

Some of them will. Fifteen years is a long time. People can grow up, and they're more likely to do so if they have something to take pride in and have a significant financial stake in, such as a home they actually own. It's far less likely to happen in a slumlord's dumpy apartment complex.

Nevertheless, suppose the person never grows up. The house gets foreclosed, and the person is kicked out. The taxpayer is then in the same position he wold have been had the person been renting from the slumlord. The only person who's worse off is the slumlord who hasn't been getting rent for the last 15 years.
 
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