EDITORIAL ROUNDUP

Feb. 23 The Wall Street Journal Subsidies for risky mortgages

Housing prices are falling after surging 40% during the pandemic. This should help buyers frozen out of the market by rising mortgage rates. So why is the Biden Administration seeking to support prices by increasing the government housing subsidy?

The Federal Housing Administration said Wednesday that it will reduce its annual insurance premium for future mortgages by 30 basis points. “On average, homeowners will pay at least $800 a year less on their mortgage, and that’s 800 more dollars in your pocket for household expenses,” Vice President Kamala Harris cheered.

Hasn’t the Administration learned anything about the costs of government subsidies? Pandemic transfer payments helped fuel consumer demand and inflation. At the same time the Federal Reserve’s historically loose policies drove a boom in housing prices, which rendered homes less affordable, especially once it tightened credit conditions.

The average 30-year mortgage fixed rate now stands at 6.5%, more than double what it was during the first two years of the pandemic. Higher home values have helped middle-class and affluent homeowners. But many lower-income and young people can’t afford the down payment and monthly interest.

The Administration’s solution: Ease credit for riskier borrowers. The FHA insures mortgages for buyers with low credit scores and down payments as low as 3.5%. Home-buyers pay a 1.75% fee up front on a 30-year loan and then an annual premium of 0.8% to 1.05%, depending on the loan and down payment size.

The FHA’s plan will slash premiums to 0.55% for most new home-buyers, amounting to $1,400 in annual savings on a median-priced home. We warned last summer that the housing lobby was promoting a premium cut to boost the slowing market, and it succeeded.

Lower FHA premiums will be capitalized in higher housing prices. If a recession leads to layoffs, recent buyers may struggle to afford their monthly payments. The housing lobby says the FHA is well-capitalized, which may be true now. But rising interest rates combined with subsidies for marginal borrowers can be a lethal combination, as the housing bust in the 2000s showed. Caveat taxpayer.

Feb. 28 New York Post Lame squirming on crime

Not only did Democrats block Albany District Attorney David Soares from delivering devastating testimony at the Jan. 30 state Senate hearing on their criminal-justice reforms, they’re now trying to deny they did any such thing. What worms.

Soares and the District Attorney Association of New York say Dems disinvited him the night before the hearing.

But Senate Democratic flack Mike Murphy denies that, pretending lawmakers were perfectly happy to let Soares testify — even knowing he’d call out the disastrous toll their “reforms” have taken on minorities, and that his words would carry extra weight since Soares himself is a black progressive.

Really, Mike? Funny: Soares spent hours preparing his remarks and had no reason not to deliver them himself. He calls Murphy’s denial a complete “work of fiction.”

And though Murphy admits someone representing Dems discussed the issue with DAASNY the night before the hearing, he refuses to say who.

Which makes Soares and DAASNY the only ones going on the record with their completely contrary account.

And Soares’ absence made it far easier for Dem senators to get on their high horses when DAASNY prez Tony Jordan, a white Republican, read out Soares’ planned remarks.

Sen. Jamaal Bailey (D-Bronx) called them “offensive” and “condescending,” complaining, “I’m curious about how testimony like this even gets in front of us at a public hearing.” Huh? A public hearing is specifically meant to allow opponents to express objections. He just couldn’t handle being challenged.

One more time: Immediately after the reforms (cashless bail, in particular) took effect in January 2020, crime shot up.

“In New York City alone, crime rose 20%, ending a 27-year stretch of yearly crime reductions,” read Soares’ testimony. This was before COVID broke out, so Dems can’t use that as an excuse.

Over the first six months of that year, 39.6% of defendants released on “non-monetary” bail were nabbed again before trial. For those with a prior conviction, the rate was 44.6%.

And the reforms “had their most devastating impact on black and brown communities.”

Soares clearly cares more about public safety than politics.

“Lawmakers attempted to silence me,” he said, but “the real victims here are those suffering from the effects of violent crime.” They’re not just “data points; they’re people.” Their stories “need to be told.”

Indeed they do. Too bad Democrats refuse to listen.