Friday, 05 August 2011 00:00
There are 435 Congressional Districts (CDs) in the U.S. but few have as many expensive homes as New York’s 5th CD.
Rep. Gary Ackerman (D-Roslyn Heights) represents the 5th CD, which covers northeastern Queens and northwestern Nassau. The district is home to Gold Coast communities where finding a residence for sale at a price less than $1 million is rare. In other words, the Congressman has a vested interest in aiding and perpetuating the high-end real estate market, allowing current constituents to sell their properties to new ones. I’ll now get to my point.
Rep. Ackerman is co-sponsoring a bipartisan bill that would keep “the maximum original principal obligation of a mortgage that may be purchased by the Federal National Mortgage Association [Fannie Mae] or the Federal Home Loan Corporation [Freddie Mac]” at $729,750 through Oct. 1, 2013. Created by Congress, these two government-sponsored enterprises (GSEs) will no longer be allowed to purchase mortgages totaling more than $625,500 effective Oct. 1, 2011. The Obama administration and the relevant committee chairs in the U.S. House of Representatives want this downward adjustment to occur as scheduled, according to a July 22 editorial in The Wall Street Journal, so it is highly unlikely Rep. Ackerman’s Conforming Loan Limits Extension Act (House Resolution 2508), will become law. It is worth noting the measure’s Republican sponsor hails from another pricey real estate market, Rep. John Campbell (R-California). His CD includes that state’s Orange County.
The opening sentence of the aforementioned WSJ editorial offers a quick window into their mindset: “If you think a taxpayer bailout of $164 billion (and counting) is enough to convince politicians to stop guaranteeing mortgages, then you don’t know Washington.” The $164 billion figure represents what the U.S. Treasury has spent bailing out Fannie Mae and Freddie Mac after each entity was placed into conservatorship in 2008.
The conforming loan limit, the size of the mortgages GSEs are allowed to guarantee, was $417,000 “but in February 2008 President George W. Bush bowed to the Pelosi Congress and increased it to $729,750 for homes in the most expensive parts of the country. This was sold as a temporary measure, but in 2009 President Obama extended it,” The Wall Street Journal stated.
“The housing market does not need a self-inflicted wound,” Rep. Ackerman said, in a news release issued after The Conforming Loan Limits Extension Act was submitted. “With the economy remaining fragile and the housing sector still struggling to recover, now is not the time to make the cost of mortgages more expensive. Reducing the conforming loan limit would hurt home values, increase the cost of down payments and interest rates, and shut prospective buyers out of home ownership. It is essential that we continue to do all that we can to stimulate our economy and keep these mortgage limits in place to ensure that the housing market remains on the delicate road to recovery.”
The Wall Street Journal clearly disagrees with Rep. Ackerman on this matter. But there was no need for the paper’s editorial page to get so upset. The legislation was written for insertion into a campaign brochure rather than enactment into federal law.
Mike Barry, a corporate communications consultant, has worked in government and journalism. Email: MFBARRY@optonline.net