Connect with us

Washington

Washington Seems Eager To Create Another Housing Crisis

Published

on

Washington Seems Eager To Create Another Housing Crisis


Washington seems to be setting up the nation to relive the housing and financial crisis of 2008-2009. That last crisis, of course, had lots of moving parts and reflected many bad decisions, but behind it all was Washington’s long insistence prior to the collapse that banks and other lenders extend more and more mortgage credit to lower-income people, the so-called sub-prime borrower. As the government for years laid on this pressure, the proportion of risky, sub-prime loans in the system grew making the system increasingly vulnerable. In the end, when many of these precarious borrowers failed to meet their obligations, all these lenders and those financial players who were vulnerable to them – in other words all in the financial system – collapsed. Now, 15 years on, the Biden administration is again pushing for more lending to lower-income borrowers and accordingly inviting another such disaster.

On the surface, the new effort looks very different from what existed earlier in this century. The essentials, however, and the effect will be the same. Leading up to the last crisis, Washington used regulatory powers to guide lenders toward sub-prime borrowers, rewarding lenders that followed the government’s lead and punishing those who resisted. The new approach relies on what is called the Loan Level Price Adjustment (LLPA) rule. It would subsidize mortgage fees for lower-income borrowers, those with low credit scores who are unable to offer substantial down payments. Those subsidies would extend to the cost of mortgage insurance, which is typically required when a buyer puts relatively little cash down. The rule would raise the funds to offer this support by charging higher fees to those with better credit scores and who are willing to make higher down payments on properties.

Advertisement

The aim is indisputably a worthy one – to bring more lower-income people into home ownership and thereby give them more of a stake in their community and an important leg up on the path to wealth creation. Worthy as the goal is, however, the new LLPA rule would fail to serve its intentions and bring other ills with it as well.

Fairness, or, to use a word much more common these days, equity, is one such consideration. It seems fundamentally unfair to press higher fees on borrowers who are more likely to repay their loan than on those who are less likely to repay it. It would further seem ill advised to effectively penalize (at least relatively) those who may have postponed their purchase for years in order to amass a larger down payment and who also imposed on themselves the financial discipline necessary to earn a high credit score.

There is a more important economic problem. The new rule, by increasing the proportion of borrowers that are more prone to default, would expose the country’s financial system to an ever-greater probability of widespread losses, in other words, the very same risks that led to the 2008-09 crisis.

To be sure, reduced fees will offer low-income borrowers some relief on their costs and to that extent, make it easier for them to meet their financial obligations. But these fees are only a small part of the cost of home ownership. The size of the mortgage and the interest rate on it constitute a greater portion of the burden. And then, of course, there are also the incidental repairs, a leaky roof, for instance, the failure of home appliances, accidents, and a long list of other expenses with which all home owners are familiar. These costs fall on all, but a low-income person, already only just able to meet even a subsidized payment structure, will, when faced with such expenses, more likely fail to meet the terms of the mortgage. If enough of these borrowers fail, the lenders will find themselves in the same kind of precarious financial position that developed in 2008.

Advertisement

It will take time to develop the full amount of risk involved. Right now, there are relatively few such sub-prime loans on the books for mortgage lenders or elsewhere in the financial system. The bankers seem to have longer memories than the people in Washington. The problem may never develop. It seems that recently the Federal Housing finance Agency (FHFA) has put the effort on pause. If the rule change does go ahead, it will take time to develop a critical mass of risky loans. The risk, however, will growth with each passing week, and then the slightest economic setback, much less the recession that is highly likely to develop soon, could bring on the loan failures and a return to the mess that all, save Washington it sees, remember all too well.



Source link

Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Washington

Man who attacked Paul Pelosi convicted in California on further charges

Published

on

Man who attacked Paul Pelosi convicted in California on further charges


David DePape, who was sentenced to 30 years in prison on federal charges after he broke into Nancy Pelosi’s San Francisco home and bludgeoned her husband, was convicted Friday of five additional charges in a California court.

DePape, 44, was convicted last year on federal charges of attempting to kidnap the then-House speaker in 2022 and assaulting her husband, Paul Pelosi, because of her work in Congress. On Friday, a jury found DePape guilty of separate charges brought by California, including aggravated kidnapping, which mandates life imprisonment without the possibility of parole.

DePape was also convicted of first-degree residential burglary; false imprisonment of an elder by violence or menace; threatening the life of a family member of a public official; and dissuading a witness by force or threat.

San Francisco District Attorney Brooke Jenkins said in a statement that the verdict “delivers justice and ensures that Mr. DePape will face consequences for his heinous crimes against the Pelosi family and our democracy.”

Advertisement

In a statement on behalf of the family, Aaron Bennett, spokesman for Nancy Pelosi, said the family was “in awe of their Pop’s bravery, which shone through again on the witness stand in this trial just as it did when he saved his own life on the night of the attack.”

“For nearly 20 grueling months, Mr. Pelosi has demonstrated extraordinary courage and fortitude every day of his recovery,” the statement added.

DePape broke into the home of Nancy Pelosi, among the highest-profile Democratic officials in the country, and attacked her husband with a hammer on Oct. 28, 2022. Paul Pelosi, now 84, was hospitalized with a fractured skull and other injuries after the assault, which left him unconscious. He called 911 after the break-in and was attacked by DePape shortly after police arrived.

DePape, a carpenter who had been living in a converted garage in Richmond, Calif., had immersed himself in right-wing conspiracy theories online. He told the federal jury that he spent his time outside work playing video games and watching YouTube videos about politics.

When he was convicted in the federal case last November, the jury found that he carried out the attack because of Nancy Pelosi’s job in Congress representing a district that includes most of San Francisco. She was his intended target when breaking into the home and a focal point of his beliefs, which included the extremist ideology of the radical QAnon movement, The Washington Post reported.

Advertisement

DePape will be sentenced for the state crimes at a later date. His attorney, Adam Lipson, said he plans to appeal, the Associated Press reported.



Source link

Continue Reading

Washington

Judge blocks parts of WA’s new parental rights law • Washington State Standard

Published

on

Judge blocks parts of WA’s new parental rights law • Washington State Standard


Most of the parental “bill of rights” the Legislature approved earlier this year can remain in effect, for now, but pieces related to when parents can access medical and mental health records can’t go forward, a judge ruled Friday.

King County Superior Court Judge Michael Scott granted a request to temporarily block parts of the law that give parents access to all medical and mental health counseling records for their children and require school districts to turn over the records within 10 days – a shorter time than allowed under federal law. 

Most of the law, created by the Republican-backed Initiative 2081, will remain in place. It allows a range of school materials, such as textbooks and curricula, to be easily available for review by parents. Parents are also given notice and allowed to opt their child out of assignments and other activities involving questions about a child’s sexual experiences or their family’s religious beliefs. 

The state Legislature approved the measure earlier this year and it took effect on June 6.

Advertisement

The lawsuit, spearheaded by the ACLU of Washington and other legal groups, argues that students, parents and school districts will be harmed by the initiative and that it was drafted in a way that violates the state Constitution. That’s despite the Office of Superintendent of Public Instruction’s assurance that much of what was in the initiative was already state law. 

In a ruling from the bench, Scott said he is sensitive to the impacts of the initiative on schools throughout the state but that was not the question before the court. 

“It’s not this court’s position to determine whether that’s good policy or not,” Scott said.

In his decision to grant the partial preliminary injunction, Scott raised concerns over the sweeping language in the initiative calling for schools to turn over all medical and mental health records and to do so within 10 days. The federal Family Educational Rights and Privacy Act requires schools to turn over records as soon as possible, or within 45 days of the request.

A written order detailing Scott’s ruling will be available next week. The injunction means that the blocked parts of the law will remain on hold while court proceedings continue. 

Advertisement

The initiative was written by Rep. Jim Walsh, R-Aberdeen, and was one of six initiatives backed by conservative hedge fund manager Brian Heywood. It passed unanimously through the Washington Senate and 82-15 through the House, with only Democrats opposed. 

Pete Serrano, who’s representing Walsh, the Heywood-sponsored group Let’s Go Washington and others in this case, said he was “extremely grateful” most of the law is intact. 

“There’s a lot of opportunity for parents to remain present in their child’s education,” said Serrano, who is also a Republican candidate for attorney general.

In a statement following Friday’s ruling, ACLU attorney Adrien Leavitt said he was pleased that parts of the initiative would not go into effect until there is a final decision. 

“But this is not the end,” Leavitt said in a statement. “We will keep fighting this case in hopes of a final judgment that shows this harmful law violates the State Constitution and should not be implemented or enforced.”

Advertisement

When the initiative passed the Legislature, Democrats who supported it emphasized that the legislation did not change any protections for marginalized groups.

Sen. Jamie Pedersen, D-Seattle, told the Standard that some Democratic lawmakers were uncomfortable with the initiative, but passing it allows the Legislature to amend the statute next session should issues arise. 

Had the Legislature declined to take action, sending the initiative to the ballot, lawmakers would have to wait two years before they could amend it if it won voter approval. 

But the ACLU of Washington, Legal Voice and QLaw, the three organizations leading the lawsuit, argue the initiative “misled state lawmakers and the public.”

“It violates the State Constitution because it fails to disclose how it revises and affects existing laws,” the groups’ lawsuit says. “This causes confusion about the legal duties of schools, their staff and contractors, and school-based healthcare providers, as well as the rights of students.” 

Advertisement

The lawsuit also contends that the initiative would strip important privacy protections for medical and mental health records for LGBTQ+ students, youth of color and students from other marginalized backgrounds.

When the initiative passed, LGBTQ+ advocacy groups voiced concerns about the potentially chilling effect it could have on LGBTQ+ youth. “Many students simply aren’t going to seek out those services,” Leavitt said Friday.

Julia Marks, litigation attorney for Legal Voice, said Friday’s ruling would help protect these students by keeping their medical and mental health records confidential. 

“Survivors of sexual assault, LGBTQ+ youth, youth who need reproductive and sexual health care, and other vulnerable students rely on trusted adults at school who can confidentially help them navigate challenges,” Marks said in a statement.

The initiative came as the socially conservative “parental rights” movement, which aims to restrict schools’ abilities to teach about gender, sexuality and race without parental consent, has gained influence across the United States.  LGBTQ+ students and advocates across the country say the movement is less about parental rights and more about targeting and silencing LGBTQ+ youth. 

Advertisement

Among the plaintiffs in the lawsuit are South Whidbey School District, equity-focused nonprofit organizations and a parent of two students in Seattle Public Schools. 



Source link

Continue Reading

Washington

WA lands commissioner wary of federal plan to kill thousands of owls • Washington State Standard

Published

on

WA lands commissioner wary of federal plan to kill thousands of owls • Washington State Standard


Washington’s public lands commissioner, Hilary Franz, is voicing skepticism about a federal proposal to kill thousands of barred owls in the Pacific Northwest to help the threatened northern spotted owl.

Franz wrote in a letter sent this week to Interior Secretary Deb Haaland that she’s concerned about “unintended consequences” and that the plan “could be unworkable given the scale of the overlapping habitat for barred owls and spotted owls.” 

The U.S. Fish and Wildlife is proposing to kill about 500,000 barred owls, living on millions of acres of land between California and Washington, over three decades. 

Hunters would shoot the owls with shotguns in most cases, according to a draft environmental impact statement released in November.

Advertisement

The Commissioner doesn’t oppose the plan but has concerns about the cost, the scope, and potential impacts to habitat,” Franz spokesman Michael Kelly said in an email on Thursday. 

He also said Franz isn’t convinced the plan represents a solution to reducing threats to the spotted owl that’s “viable, affordable, or achievable.”

Franz, who is also running for a U.S. House seat in western Washington, asked to meet with Department of Interior staff but had not received a response from Haaland as of Thursday.

The U.S. Fish and Wildlife Service in November sought public comment on its draft barred owl management plan, noting that the owls are prolific hunters that decades ago moved beyond their traditional range in the eastern U.S., into western forests.

This leaves them competing against northern spotted owls, the species known for its central role in the battles in the 1980s and 1990s over logging Northwest forests. The Fish and Wildlife Service plan also aims to prevent barred owl incursions into California spotted owl habitat.

Advertisement

Washington state designated the spotted owl as endangered in 1988 and the federal government listed the bird as threatened under the Endangered Species Act in 1990.



Source link

Continue Reading

Trending