Over the weekend, Donald Trump floated yet another dumb idea that probably won’t go anywhere, as is his habit. But instead of it being one of his own stupid brainfarts, it was instead the brainfart of one of his (alleged) best pals. At the suggestion of Bill Pulte, the director of the Federal Housing Finance Agency, Great Leader got on his fake Twitter substitute Saturday night and posted this terrific idea (archive link) that Pulte ran by him just 10 minutes before Trump sent it out into the world:
Yes, we said “10 minutes,” since Politico reports that’s all the time it took for Pulte’s flattering message to convince Trump that introducing an all-new type of mortgage would win him a place in history and probably yet another Nobel Peace Prize, for solving high home prices. All Pulte had to do was show up at Trump’s Palm Beach Golf Club with a “3-by-5 posterboard” calling Trump a great president just like FDR, and Trump was all in. Pulte even said that the agency he runs is already working on rolling out the new mortgages.
The idea came under attack almost immediately, and not only from economists or lefties, but also from usually reliable Trumpsuckers, including such worthies as “Laura Loomer, Mike Cernovich, Christopher Rufo, Sean Davis of the Federalist, and Rep. Marjorie Taylor Greene (R-Ga.),” who took to social media to say it was a terrible idea and probably that Pulte should be flayed.
OK, but let’s be clear: Maybe it’s a terrible idea, but it’s never wrong to tell Donald Trump that he’s a great president, especially if you tell him that with nifty graphics.
The supposedly brilliant idea behind extending the standard home mortgage from 30 years to 50 years is that the longer repayment period would mean lower monthly payments, making homes more affordable, and who could possibly object to that? There’s only one eensy-tiny downside, which is that the short-term benefit of lower payments would result in roughly double the amount of interest over the extra 20 years of the mortgage, while also greatly reducing the rate at which homeowners would build equity in their home.
As the AP explains, monthly payments for a home costing $415,200 — the average home price as of September — would be $2,288 with a 30-year mortgage, assuming a 10 percent down payment and 6.17 percent interest. Extend the loan period to 50 years, and your monthly payment would drop to $2,022, but only if banks didn’t demand a higher interest rate. But there’s a big price for that $266 per month “savings” on payments:
Because even more of the monthly payment on a 50-year mortgage would go toward interest on the loan, it would take 30 years before a borrower would accumulate $100,000 in equity, not including home price appreciation and the down payment. That’s compared to 12-13 years to accumulate $100,000 in equity when paying off a 30-year mortgage, excluding the down payment.
A borrower would pay, roughly, an additional $389,000 in interest over the life of a 50-year mortgage compared to a 30-year mortgage, according to an AP analysis.
Congratulations, that’s almost the initial cost of the house! And you won’t be able to pay off your mortgage while you’re still alive, probably. Everyone else who’s run the math, from Fox News to Fortune magazine to the Wall Street Journal, agrees that a 50-year mortgage is a terrible idea.
But in Trump’s defense, Pulte’s pitch was very flattering, and it put Trump in the company of FDR in history. Didn’t you see how great the two portraits looked next to each other?
Oh, hey, this is where we also point out that Donald Trump is supposedly a real estate and financial GENIUS, and that Bill Pulte is the grandson of bajillionaire homebuilder and suburb developer William J Pulte. No particular reason that background might have dissuaded either failson from latching onto a stupendously bad mortgage scheme, why did we even mention it?
Oh, but let us just enjoy the backbiting in Trumpworld, as reported by Politico, which may be Tiger Beat on the Potomac, but is great at passing along such High Bitchiness.
One White House insider said that right after Trump posted the great idea — with no explanation or follow-up — angry phone calls started pouring in to the White House.
“[Pulte] just sold POTUS a bill of goods that wasn’t necessarily accurate,” the person said. “He said ‘FDR did it, you can do it, it’s gonna be a big thing.’ But he didn’t tell him about all the unintended consequences.” […]
“Anything that goes before POTUS needs to be vetted,” said the person present for Pulte’s poster presentation. “And a lot of times with Pulte they’re not. He just goes straight up to POTUS.”
By Monday, Great Leader was having difficulty defending the brainstorm even to Lara Ingraham on Fox, sputtering that “All it means is you pay less per month. Pay it over a longer period of time. It’s not like a big factor. It might help a little bit.” Jeez, why is anyone mad about that?
One of Politico’s two sources clearly had their knives out for Pulte, griping, “The thing that became clear from this latest episode — if it wasn’t already clear — is that Bill Pulte doesn’t know the first fucking thing about how the mortgage markets operate. After publicly humiliating the president with his moronic 50 year mortgage plan it’s safe to assume that his days are numbered.”
And now it’s time for the idea to go away, and for Trumpworld to pivot to blaming Joe Biden for everything wrong in the economy.
Also too, credit to The Daily Show’s Josh Johnson for his pithy observation on the proposal: “This seems like a bad idea. And if Black people could get loans, I’d be worried.”
And That’s How Donald Trump Solved ‘Healthcare’
[AP / Business Insider / Politico]
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