Tags: Morris | Obama | housing | bubble

Dick Morris: Obama Engineering Housing Bubble Through FHA

Wednesday, 20 Feb 2013 07:30 PM

President Barack Obama is brewing up another housing bubble via the plentiful and loose mortgage underwritings of the Federal Housing Administration, says Republican strategist Dick Morris.

“You’d think Obama would learn from the history of the collapse of the housing market in 2007-09 and how it took the whole global economy with it,” he says in a video on his website, dickmorris.com.

“But he’s doing exactly the same thing as caused that. And it’s going to happen in the next one, two, or three years. There is going to be a huge crash again because of a housing bubble.”

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

Where last time it was government-sponsored enterprises Fannie Mae and Freddie Mac that were behind the crisis, this time it’s a direct government agency, the FHA, Morris says.

“They’re doing the same thing as led to the housing bubble. They’re giving mortgages all over the place.” In 2008, 7 percent of mortgages were underwritten by the FHA. Now it’s more than one-third, Morris says.

Mortgages require only a 3.5 percent down payment, “just like the subprime crisis,” Morris says. And that 3.5 percent can be folded into the amount of the mortgage, so you don’t have to put it down upfront.

Interest payments also are being folded into the mortgage principal, again just like the last housing bubble, Morris says. “All of the same elements are there.”

To secure a mortgage with a 3.5-percent down payment, you need a credit score of only 600, Morris says. A full 81 percent of American households are above that level. “That’s a real exacting standard,” Morris quips.

“If, God forbid, you’re below 600, you can still get a mortgage, but you have to put 10 percent down,” he says. “These are precisely the policies and misguided idealism that led to the crash that has thrown the world into recession.”

Obama is simply repeating history, Morris says. “His goal is to pump up housing construction, push up housing prices, push up employment in construction, and pretend there’s a recovery going on,” he says.

“But at what price? We’ve been through this before. Fool me once — shame on you. Fool me twice — shame on me.”

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

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