Marcy Kaptur is the elected official who serves Ohio’s Ninth District. Her latest newsletter touts her recently proposed legislation, one which seems to be pure alchemy. In her words, “By arranging financing that recalculates terms, debt-to-income ratios, mortgage interest rates, and other factors, short-term student debt could transition into longer term home ownership.”[1]
Representative Kaptur suggests four options for the various Federal agencies to figure out how to make this happen, i.e., how to add a mortgage debt to a student loan debt and somehow creat new wealth. Rather than describe the four options, this essay mentions the points of the plan that Rep. Kaptur notes as key to making the plan achieve its objective, “The goal is to connect creditworthy Federal student debt holders with housing properties for sale but held by the Federal Government.”[2]
Now, this plan is not the final method for achieving the goal – it is a pilot demonstration program. An interim report to Congress shall be made in three months describing which types of assistance are to be provided and a final report to Congress shall be made within three years evaluating the impact of the program.
Applicant eligibility includes (1) employed, creditworthy debtors of student loans in good standing, (2) who agree to live in the homes for at least three years, (3) have not owned a home in previous three years, and (4) complete an approved program of counseling regarding the responsibilities and financial management of homeownership.[3]
Eligible properties are selected by the Secretary of the Department of Housing and Urban Development and the Director of the Federal Housing Finance Agency, based upon such criteria as (a) “geographic diversity (rural v. urban),” (b) ownership by the Secretary, the Federal National Mortgage Assn, or the Federal Home Loan Mortgage Corp., (c) occupancy of 1 to 4 families, and (d) the occupancy of which “will promote community revitalization.”[4]
To ensure payment for her three year program, Rep. Kaptur stipulates an authorization for appropriation “as necessary to carry out this Act for fiscal years 2018 to 2020.”[5] No limit is suggested to whatever it may cost; just “as necessary.”
Approximately two decades ago, the federal government intervened in the mortgage loan industry and practically bankrupted the country. Within the last decade it took over the student loan industry and added 40 million Americans more under another $1.3 trillion debt. Rep. Kaptur, the Alchemist, says we can put these two debts together and create new wealth simply by spending more money.
Socialists cannot understand that spending provides neither wealth nor growth; only investment can do these things. Ah! But now we have Marcy Kaptur’s alchemy.
[1] Transforming Student Debt to Home Equity Act of 2017, H.R. 3134, 115th Cong. § 2(8) (2017).
[2] Id. at § 2(9).
[3] Id. at § 3(b).
[4] Id. at § 3(f).
[5] Id. at § 3(g).