OMB POLICY STATEMENTS
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CBO and OMB Differ on Mortgage Bill
The CBO and OMB have come to two different conclusions in regards to a proposed federal bill to insure house mortgages. The CBO announced that it will cost the government over $100 million per year to implement the program, while the OMB has stated that the program will bring $200 million in revenue annually to the government. The proposed bill will offer mortgagees to those people who qualify, but cannot afford the down payment. The estimated cost/revenue difference between the two agencies is due to the rate of prospected defaulters on the loans. OMB believes that CBO’s estimates have much too high a rate of defaulters under the proposed details of the bill.
“CBO estimates that 1 percent of the new program’s beneficiaries would default during its first year, and 30 percent over 30 years.”
“Supporters of the bill say there is little reason to think that recipients of the zero-down-payment mortgages would be significantly more likely to default on their loans than current holders of FHA-backed mortgages. They also point to provisions in the legislation, such as a limit on the number of defaults before the program shuts down, that they say will keep the program from costing too much money.”