Former Vice President Mike Pence's organization, Advancing American Freedom (AAF), recently warned that the Biden administration could cause a repeat of the Great Recession if it pushes ahead with a plan to solve housing affordability.
In April, the Biden administration published a new product proposal that would allow government-sponsored enterprise, Freddie Mac, to purchase certain single-family, closed-end second mortgages. If approved, this would allow borrowers an alternative way to access their home equity without surrendering a first mortgage with a more favorable interest rate than what is currently available.
Pence's group, however, argues that such a proposal would only lead to another $3 trillion in liabilities for Freddie Mac and warns that it would only further fuel inflation and cause instability in the mortgage market. Te group said this could lead to a repeat of the Great Recession of 2008, as reported by Fox Business, citing a policy memo issued by the AAF.
"President Biden and the Democrats should get out of the mortgage business before America barrels headlong into a repeat of the 2008 housing crisis," AAF Executive Director Paul Teller told the outlet.
In addition, the AAF also warned against the administration's plan to provide $10,000 in tax credits to first-time home buyers and starter-home sellers, noting that the country's housing affordability crisis is caused by a shortage of homes.
Under Biden's tax credit proposal, first-time buyers would receive $400 a month in tax credit for the next two years. Sellers who list their "starter home" would also receive a separate $10,000 tax credit to encourage them to move to a bigger home amid elevated mortgage rates.
What Is the AAF Proposing?
The AAF is now urging conservative lawmakers in the U.S. Congress to utilize the "Congressional Review Act" to stop Biden's proposals. It is also urging lawmakers to end the conservatorship of Fannie Mae and Freddie Mac, both government-sponsored entities that guarantee mortgages.
Furthermore, the group argues that instead of providing tax credits and second mortgages, the Biden administration should instead return surplus federal lands back to states to increase the supply of homes in the housing market, as well as eliminate agencies such as the Environmental Protection Agency (EPA) which it said it driving up the cost of building homes.
READ NEXT: U.S. Home Prices Have Soared More Than $400,000 Over the Last 50 Years