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Quick Hits: Kinder, Gentler Fannie Mae


Brief scrutiny of today's headlines.

A kinder, gentler Fannie Mae (FNM) has a short-term fix for the housing mess - one that won't solve the long-term problem, and may in fact create new ones.

Fannie says it will permit "qualified renters" in foreclosed properties to stay in their homes.

Fannie calls this beneficence (at taxpayer expense) the National Real Estate Owned Rental Policy. Better to call it: Kick The Problem Down the Street and Don't Think About It Until the Day After Tomorrow If Ever Plan.

Those renting a property at the time Fannie Mae acquires it will be offered a new monthly lease at market rates or will receive financial help if they choose to move. The new plan applies to condos, co-ops, single-family detached homes, multi-unit dwellings and manufactured housing, better known as trailers. In short, no wretched hovel left behind.

Fannie Mae has halted evictions through the end of January to allow those who couldn't keep up with their mortgage payments to review the new rental program.

It's impossible not to be moved by the plight of people who have lost their homes. But the basic question is: What genius offered mortgages that many first-time home buyers couldn't afford and had little or no chance of ever repaying?

Setting aside the fact that this government-induced stupidity nearly toppled the nation's banks and killed the economy, shouldn't someone ask if it's wise to insert Uncle Sam into the rental business?

Those who defaulted on their mortgages and plan to rent are unlikely to be able assume a mortgage in the future. It's also impossible to imagine that Fannie Mae could order renters out of their homes.

That could lead to creation of the US Department of Aspiration and Stucco - a federal agency overseeing government-owned rental properties that were once in private hands.

It would be a catastrophe. If you doubt it, imagine the incompetence and neglect that turns public housing into hell-holes for those who live there.

Now transfer that incompetence and neglect to middle-class neighborhoods. Few dare to call it socialism - but it sure is stupid.
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