All posts tagged: mortgages

Waste Of The Day: Millionaire Mortgages

Waste Of The Day: Millionaire Mortgages

Published by Jenni Sidey

Authored by Jeremy Portnoy via RealClearInvestigations, The Department of Agriculture’s Section 502 loan programs help low-income families buy homes with mortgages that don’t require a down payment. But in 2013, an investigation by Reuters found dozens of millionaires took advantage to purchase vacation and rental homes. Though the millionaires later repaid their loans, the program as a whole covered $500 million in losses from defaults in 2013, or $715 million in today’s money. That’s according to the “Wastebook” reporting published by the late U.S. Senator Dr. Tom Coburn. For years, these reports shined a white-hot spotlight on federal frauds and taxpayer abuses. Coburn, the legendary U.S. Senator from Oklahoma, earned the nickname “Dr. No” by stopping thousands of pork-barrel projects using the Senate rules. Projects that he couldn’t stop, Coburn included in his oversight reports. Coburn’s Wastebook 2013 included 100 examples of outrageous spending worth nearly $30 billion, including the loans for millionaires. Search all federal, state and local salaries and vendor spending with the world’s largest government spending database at OpenTheBooks.com. Key facts: Reuters …

Home Ownership: Madness Over 30-Year Mortgages

Home Ownership: Madness Over 30-Year Mortgages

Published by Jenni Sidey

I have argued over and over (for example, here, here, and here) that large language models (LLMs) create an illusion of intelligence but are, in fact, prone to making logical and factual errors. That makes it risky to rely on them when the costs of mistakes are substantial. As a lifelong finance professor and investor, I have noted that LLMs can give bad financial advice and that AI-powered ETFs and mutual funds have substantially underperformed the S&P 500. Several correspondents have pointed out that humans make mistakes too, which is undeniable. For example, the Wall Street Journal recently published an op-ed with the provocative title, “The Case Against 30-Year Mortgages.” The article itself was even more provocative — and wrongheaded. The author argued that the reason millennials are struggling to buy homes is “an insidious financial instrument so predatory and deceptive that it has warped the housing market for nearly a century. Ladies and gentlemen, I present the 30-year mortgage.” The author went on: “The mortgage isn’t the foundation of the American Dream. It’s the …