Foreclosure aid unpopular

NY Times:

As the Bush administration and Congress consider proposals to ease the home foreclosure crisis, local governments across the country have been lending money to imperiled homeowners and confronting some opposition.

Some of these municipal and state efforts have met resistance from people who consider the assistance undeserved and adamantly oppose anything that resembles a taxpayer bailout.

Seattle, which has nowhere near the kind of foreclosure problem other cities have, began a modest program last month offering loans of up to $5,000 to help a few dozen homeowners avoid losing their homes.

Not only are people in Seattle relatively prosperous, but they have a reputation for being nice, too. Yet no sooner had Mayor Greg Nickels announced the program than opposition surfaced.

“Just can’t agree with using taxpayer dollars to bail out private homeowners, no matter how the mayor tries to justify it,” read a complaint posted on the “Soundoff” section of The Seattle Post-Intelligencer’s Web site.

Mark Ellerbrook, who manages Seattle’s homeownership program, said that, aside from residents hoping to apply, few people were enthusiastic about the program. He said he understood that reaction, given the local housing market.

“People struggle to buy homes in this city, for sure,” Mr. Ellerbrook said. “And then you have what looks, on the face of it, like the city giving money to people who made bad decisions.”

In Massachusetts, MassHousing, a quasi-state agency, began a loan refinance program last summer that relies on bond revenue. After its initial public relations effort, the agency had to make clear “that this is not taxpayer-funded,” said Tom Farmer, an agency spokesman.

“The talk radio was all up in arms: ‘Why should we be helping these people out?’ ” Mr. Farmer said. “ ‘They should have known what they were doing.’ ”

The goal of these programs is not just to keep people from losing their homes, but also to limit broader economic fallout, including plummeting property tax revenues and widespread declines in home values. Still, they pit what some government officials say are practical economic solutions for the common good against individual ideals of fairness and personal responsibility.

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While the negative reactions have not stopped the assistance efforts, it has put some local officials on the defensive and forced them to try to sell the programs to the general public, not just to the intended recipients.

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When the Times says the fold in Seattle are nice that is their code for liberal. Lending people money to pay loan payments only digs them deeper into a hole. They would be better off working with a lender to restructure the loans and hope the housing market comes back strong enough to bail them out of an investment they cannot afford.

Seattle is one of those areas that has artificially raised the price of homes by restricting the supply of land where they can be built. That has in fact contributed to the subprime problem because the homes were not affordable using ordinary loans. Where ever you have severe use restrictions on building you will make the existing homes less affordable for new buyers. Where you do not have such restrictions like around Houston, Texas, homes are more affordable and there are fewer foreclosures.

Nicole Gelinas writing in the NY Post discusses the negative reaction to the Times first bail out story and notes many of the examples were not ones that generated much sympathy.

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he "solution" the Times writers seem to seek here isn't just merely guaranteeing every American freedom from financial losses or foreclosure - but freedom from any economic anxiety at all (plus a right to have a house whose value rises constantly).

One passage bemoans the millions of Americans "trapped in their homes": "The vast majority - embedded in their communities, their children in public schools, their reputations at stake - wait nervously in hope that prices will . . . rise once again, . . . restoring their freedom to sell or refinance."

But readers aren't biting. More than 400 vehement reader comments on the Times' site ran 20-to-1 against any taxpayer rescue - with fairness and basic economics the main objections:

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That probably explains todays article. It is also another example of how out of touch the liberals at the NY Times are.