Fri Mar 9, 2012, 07:56 AM
City Lights (24,367 posts)
Mother Jones: Rick Santorum's Housing Hypocrisy
The GOP candidate wants government out of housing and Fannie and Freddie eliminated—but bought his first home with a government-backed mortgage.
—By Andy Kroll and Tim Murphy | Fri Mar. 9, 2012 3:00 AM PST
Rick Santorum wants the government out of every aspect of Americans' lives—especially the housing market. He pledges to eliminate Fannie Mae and Freddie Mac, the twin government housing giants that help guarantee 90 percent of all new mortgages in America. As for jump-starting the country's dismal housing market, Santorum wants to "let capitalism work" and allow the housing market to "find its bottom." Only then, he says, will the recovery begin. It's a plan that would make Adam Smith proud.
Yet Santorum wasn't always so opposed to government intervention in housing. In a deal that's gone unreported during his presidential run, Santorum bought his first house in 1983 with a cut-rate government-backed mortgage, according to campaign records compiled by Sen. Harris Wofford (D-Penn.), who Santorum defeated in 1994. He received his loan through a state program to boost home ownership among low- and middle-income families. Santorum, in other words, benefited from a program whose mission mirrored that of Fannie and Freddie, the companies he now rails against and wants to dissolve. (Santorum spokesman Hogan Gidley did not respond to a request for comment.)
Santorum, then a law student and a Pennsylvania state senate aide, landed the mortgage through a program run by the Pennsylvania Housing Finance Agency (PHFA). He used the $41,600 loan to buy and renovate a three-story brick house in Harrisburg, the state capital. According to a 1994 Philadelphia Inquirer story, the interest rate on the government-backed mortgage was 13.08 percent—more than 3 percentage points lower than the market rate at the time.
The PHFA's loan program was the first of its kind in the state. State bonds backstopped the mortgages, only lenders approved by Fannie and Freddie could issue them, and families earning more than $35,000 did not qualify, according to PHFA records. (Santorum's income totaled $27,000 the year he got the loan.) The loan's promise of a low, fixed interest-rate was so enticing to working and middle class home buyers that, as the Inquirer noted, the PHFA's board decided not to publicize the program, fearing a "potential problem" like a mad rush on the day the loans were made available.
Read the entire piece at MotherJones.com
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