New lending rule in the name of 'social justice' will fuel dangerous new housing bubble
A new U.S. Department of Housing and Urban Development mortgage-lending rule reeks of “social justice” — a concept that always defiles economic rules — in its focus on outcomes rather than opportunity. It will set up the housing market and economy for another “bubble”-driven crash.
The “disparate impact” rule means that “any lending standard that yields different results for different racial or ethnic demographics is in itself discriminatory even if the lender has no intent to discriminate and applied lending standards equally to all applicants,” The Washington Free Beacon reports.
It echoes those nonsensical Community Reinvestment Act provisions that encouraged riskier lending. The rule “will impose racial quotas on lenders of the same type that previously led to the mortgage crash,” says Heritage Foundation scholar Hans von Spakovsky.
The rule perversely punishes lenders for doing what they should — engaging in necessary discrimination by denying mortgages to applicants unable to repay them. Whatever “help” this rule gives such unfit borrowers ultimately will harm the housing market and the economy when these loans inevitably slide into default and foreclosure.
Legal experts doubt this rule could withstand a Supreme Court challenge under the Fair Housing Act and the Obama Justice Department seems less than eager to defend it there. But the economic verdict on it already is in and requires striking this “disparate impact” standard from the mortgage-lending rule book.
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments â either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.