Category Archives: Housing

Why Isn’t Obama Doing Anything About Mortgages?

The last time whitehouse.gov posted anything about home mortgages was on August 3rd of this year. President Obama also did not even touch the housing issues that continue to plague the economy in the jobs plan he gave to Congress. As the employment rate continues to hover around 9 percent, it has forced many banks to foreclose on homes to families they lent money to. At the same time banks are not lending any money out so new homes can’t be built, or for businesses for them to hire. But then again, there aren’t a lot of people asking for money either. But that is no excuse for Obama not to take on the housing problem. In fact, it would be good for him politically as well.

Whatever you think about Obama’s jobs plan, there is nothing in there that will actually create jobs in the short term. In the plan that he said Congress should pass now, the tax breaks that act as incentives for businesses do not take effect until 2012. We of course need more jobs in this country so families can be supported, and banks are not going to get their money back if no one has a job. It’s a cyclical problem which is not going to go away anytime soon if no one has any guts to spend money. Even though the basic functions of the economy are fine, no one is demanding anything that will get it moving again.

If Obama did propose a plan to help families pay their mortgages it might actually have a bigger affect than the tax based one he proposed. Housing is a large part of the economy because it affects so many other areas. Building a house of course creates jobs for the contractors and the suppliers they buy from. But it is also great for areas because businesses are more likely to open a store where they know people will live. Schools can also be built, along with fire houses and police stations.

One of the heaviest hit states in the country is Florida and its 27 electoral votes. There have been so many written and televised pieces on how bad the situation is I can’t help but think politicians are afraid to talk about it. Not in any of the Republican debates that recently took place (two of which were in Florida) was the housing crisis mentioned. If any candidate next year is serious about fixing the economy, they have to propose a plan on housing.

A part of it is that anything they seriously put forward won’t help families in the short term and there’s no real way to promote it like it will. But that should not stop them from trying to enact policies that might solve the problem.

Senators Menendez and Enzi proposed legislation that would allow foreign banks to lend people money specifically to build houses. The problem is that Europe is having the same problems, if not worse, that the U.S. is having. While it is a nice thought, there is no reason why other banks would want to invest in the housing market. One idea that might help is to raise interest rates on new home mortgages. If banks know they will make more money if they are able to find people who want a mortgage, they will want to find those people themselves instead of waiting for them to come to them.

There are also a lot of houses and apartment complexes around the country that need a lot of work. By renovating them for new families, the prices for them will go up in the long term and people will be getting jobs to work on them. The renovations could also include making the houses more energy efficient. After Hurricane Katrina a lot of the houses that have been built in the area will save the families living in them thousands of dollars a year.

You could also make it easier for investors to build new houses or renovate them. By giving them tax incentives for a limited amount of time, say a year, to put money into projects that will spur the housing market they might bite. There are plenty of families that need a home to live in right now and the new developments/projects will help grow the area and jobs they take place in.

These are just a few ideas that might help. But implementing them will take time and Americans do not always have a lot of patience. But with things as bad as they are right now, people are willing to listen. That includes the thousands of people without a home right now in Florida. They are looking for someone who they believe understands what they are going through and at least has an idea on how to help them.

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Filed under Economics, Housing, Jobs

No Place Like Home

As the housing market continues to slog along, many American’s are facing foreclosure, unable to sell their homes, and recent reports have shown banks are not willing to help people lower their monthly payments. On top of that, the Washington Post completed a yearlong investigation into the Department of Housing and Urban Development (HUD) showing many of the funds allocated have not been used.

According to the Post, $400 million dollars has been allocated for 700 projects across the country, but many of those projects have not been constructed because managers could not get funding from banks, land codes had been violated, or just plain old politics (Not In My Back Yard). Many of these grants were to be used to build developments for people living below the poverty line. This makes it a two edge problem; not having the money spent hurts the area it was supposed to be spent in, and it leaves people who need those homes looking for places to live.

The article described how HUD was having trouble enforcing their own rules because they did not have enough lawyers, and even while the majority of states tell HUD that the projects are not able to take off, the process is very slow because it goes through a lot of red tape. This left millions of dollars in accounts that have been sitting there for years. In the meantime, these funds could have been transferred for projects that are ready to be built, which would have created jobs and helped to keep the economy moving.

Some of this shouldn’t be that big of a surprise considering the state of the overall housing market. And enforcement has always been a problem when it comes to government programs, usually because agencies are understaffed. One way to raise revenue and lower the debt would be to hire more IRS agents. But if there is a lack of communication between local, state, and federal officials, there is an easy fix: the internet.

With all the work being done to make the federal government more transparent, and releasing data from within the agencies with data.gov, why not create a program that shows all the players involved within a project what step they are at? Agencies at HUD can look for the last time someone updated the project within the program, and if it has been a while they can get in touch with local authorities and ask for an update. There are plenty of programmers and companies that figure out how best to create these collaborations which, if done right, can make sure everyone is on the same page and build the projects that will benefit the families that need a roof over their heads.

The recent recent floods in the south have destroyed a number of houses, and even though the Post points out that some non-profits do not have the expertise to properly build them, there are plenty of organizations that do. In fact, many of them can be found working in New Orleans as I’m writing and you’re reading this post. Many of the houses being built are green houses where so family that lives in the house will save money on their heating and electric bills.

A major hurdle in this effort will be to get the banks to loan money to landlords and managers of these projects. But in a recent interview with housingfinance.com, Bob Simpson, Head of Fannie Mae’s Affordable Housing Unit said “As we look at our production on a month-to-month basis, we’re definitely very busy, and that’s probably the best sign that it’s working. We now have a dedicated affordable credit team, a dedicated production team, and a pricing team that just prices affordable transactions.” Translation: Since we were bailed out by the Federal Government, it gave us the ability to get rid of the loans we never should have made, and now we can start to create more loans that won’t bust.”

Last week, the major banks reported the amount of people who owed money on their mortgage was the lowest in 15 years, which could give them the confidence to start lending more money. Dorothy was right, there is no place like home, and building them can help America’s economy and families.

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Filed under Banks, finance, Government 2.0, Housing, HUD, poverty, Public Policy