Friday, October 03, 2008
The 10 most feared words
The 10 most feared words, “I’m from the government and I’m here to help you.” - Ronald Reagan
I missed this in my quick perusal of H.R. 1424 yesterday. Had I taken more time, looked closer and realized the greater implications of the following, I would have been even more adamantly against this piece of legislation.
The very important section is as follows:
10 (b) HOMEOWNER ASSISTANCE BY AGENCIES.—
11 (1) IN GENERAL.—To the extent that the Fed-
12 eral property manager holds, owns, or controls mort-
13 gages, mortgage backed securities, and other assets
14 secured by residential real estate, including multi-
15 family housing, the Federal property manager shall
16 implement a plan that seeks to maximize assistance
17 for homeowners and use its authority to encourage
18 the servicers of the underlying mortgages, and con-
19 sidering net present value to the taxpayer, to take
20 advantage of the HOPE for Homeowners Program
21 under section 257 of the National Housing Act or
22 other available programs to minimize foreclosures.
23 (2) MODIFICATIONS.—In the case of a residen-
24 tial mortgage loan, modifications made under para-
25 graph (1) may include—
1 (A) reduction in interest rates;
2 (B) reduction of loan principal; and
3 (C) other similar modifications.
This section of 1424 in essence gives the US government the authority to modify the terms of any mortgage over which it has control under H.R. 1424. Since that includes Fannie Mae and Freddie Mac, this provision extends to the majority of mortgages in the United States.
This means that if you are unhappy with the terms of your mortgage and it is in a security under the authority of the US government, you can petition the appropriate authority and they can have the holder of your mortgage lower the interest rates, reduce the principle amount owed, change the length of the note, lower the points, or what ever they determine will make you happy.
One can infer that the opposite could also happen. If you are not a constituency of what ever party is in power, if you petition the government in your behalf, it is possible they could use their authority to punish you for not having the correct political leanings. Raising your rates, increase your principle, shorten the length of the note or what ever they wish to convince you to see it their way.
This is a gross violation of both the rights of the property owner and the mortgage holder. If you are holding a note in the sale of property while you have a mortgage covered under this section, while you may be able to secure a reduction in the terms of the mortgage you owe, you may be required to reduce the terms to the individual to whom you are selling the property as well. In effect, reducing the income you receive from the sale of the property.
This is a huge socialization of the mortgage industry that very well may have implications far beyond the $700 Billion bailout of the financial markets. If you think this analysis is overblown, consider that lines 15, 16, and 17 state that “…the Federal property manager shall implement a plan that seeks to maximize assistance for homeowners and use its authority to encourage…”
That is a mandate, not a suggestion, to federal officials to secure the very best situation for the homeowner. There is no mandate to ensure a fair process, to take into consideration the costs, risks or profits of the holder of the mortgage.
And that last part, “use it’s authority to encourage.” As we all know, the federal government doesn’t “encourage” anything. They “mandate, direct, require.” Does the IRS “encourage” you to pay your taxes?
Does the State Department “encourage” you to get a passport if you wish to re-enter this country after you visit a foreign nation? Does the military “encourage” you to serve you full term of enlistment?
While many parts of this bill are legislated to expire at a date certain, and there are provisions to extend the authority set in the bill, there is no sunset provision of the authority given in Section 110. Therefore, without specific legislation by Congress, this authority will extend for as long as the federal government holds interest in any mortgages, either directly or by proxy via an institution in which it holds interest.
No, our representatives have not voted for a bailout of the financial system, they just voted in a far more sinister move to socialism than the original bill rejected by the House on Monday.
We all need to take a very jaundiced look at our Washington legislators and put them and the legislation they consider under the microscope of democracy. The actions they are taking, some with cunning and guile, others by misguided counsel and poor oversight, is taking us in a direction where we will lose the ability to live our lives in freedom.
With freedom comes responsibility. When we accede responsibility to a higher authority, we also give up our freedom.
Download and read the full text of Section 110
Read the full text of H.R. 1424
"We are all in the same boat on a stormy sea and
we owe each other a terrible loyalty." - G. K. Chesterson
Labels: financial crisis, HR1424, legislation, mortgage crisis, Ronald Reagan, socialism, taxes
