Economy

Bachmann Wanted To Eliminate Mortgage Lending Programs After Receiving The Maximum Loan From Them

GOP presidential candidate Rep. Michele Bachmann’s (R-MN) political platform is built on the idea that people should rely on neighbors and God, not government. In that vein, the existence of the government sponsored mortgage enterprises (GSEs), Fannie Mae and Freddie Mac, is practically heretical. A “fierce critic” of the mortgage-lending programs and their role in the financial crisis in 2008, Bachmann has repeatedly called to abolish the GSEs, wanting them to “wind down and file for bankruptcy.”

Thus, it is somewhat surprising to learn that “just a few weeks before Bachmann called for dismantling the programs,” she and her husband actually took advantage of a home loan backed by those very same entities. According to the Washington Post, the Bachmanns received the maximum loan available from either Fannie Mae or Freddie Mac to help finance a “5,200-square-foot golf course home”:

Just a few weeks before Bachmann called for dismantling the programs during a House Financial Services Committee hearing, she and her husband signed for a $417,000 home loan to help finance their move to a 5,200-square-foot golf course home, public records show. Experts who examined the loan documents for The Washington Post say they are confident that the loan was backed by Fannie Mae or Freddie Mac. […]

The experts said the Bachmanns bought a more expensive home using typical strategies during a time of easier credit. With their existing home still on the market, they assumed liability on the same day for the $417,000 mortgage and a $249,999 secured line of credit backed by the residence, records show.

The $417,000 mortgage was the cap of what Fannie Mae and Freddie Mac would loan at the time in her region.

While hypocritical, the Bachmanns’ situation is not uncommon. In fact, “millions of other home purchasers” and “other members of Congress” took advantage of the lower interest rates that occur due to government backing. Indeed, Fannie Mae and Freddie Mac back more than 90 percent of the mortgages in the U.S.

This is essentially why Bachmann’s demand to gut Fannie and Freddie Mac “would cause significant uncertainty among the investors in GSE-issued mortgage-backed securities,” thus “threatening the primary source of mortgage credit we have.” Such a serious blow to the already-fragile housing market would severely hinder economic recovery and shove housing policy back into the 1930s. As TP Economy editor Pat Garofalo pointed out, “removing all government support for the mortgage market would take us back to an era when only the very wealthy had access to homeownership.”

Earning $174,000 a year, that might work for Bachmann. But for the millions of Americans who still dream of owning a home, her hypocritical ideology shouldn’t make it past the front door.