The weekend edition of ‘USA Today’ (May 15-17, 2009) featured a front page story titled “Feds Face Big Losses in Home Market”.
The article points out that the federal government, or in reality the taxpayers, own more than 50,000 houses and is having some trouble unloading them. Incidentally, that many houses would fill the cities of Riverside, California or Miami, Florida.
According to the article, the Department of Housing and Urban Development has acquired at least 110,000 foreclosed houses since 2007, spending about $12.2 billion to reimburse lenders after the owners defaulted on government backed loans. To date, HUD has been able to recover only about $5.5 billion by reselling the homes – HUD currently has about 38,000 homes still for sale.
Government owned homes are owned by several different government agencies with most properties ending up in the hands of the government when borrowers default on government backed mortgages. In some cases, the government foreclosed on loans it wrote or took over foreclosed homes from private lenders. In addition to the 38,000 homes presently owned by HUD, the Department of Veteran’s Affairs owns almost 9,000 houses, the Department of Agriculture owns about 1,000 houses, and FDIC owns around 3,200 houses.
As big as these numbers are, they are only a small portion of the many homes seized by lenders during the present foreclosure crisis. About 1.2 million homes have been foreclosed on nationally during 2007 and 2008, according to RealtyTrac, an organization that tracks such numbers.
Government owned houses create their own set of challenges in a time when the government is already spending billions of dollars to rescue banks swamped by foreclosures. Mark Bologna, director of the Veteran’s Affairs Department’s Loan Guarantee Service is quoted in the article, “Every day a house is on the market, you have to pay to maintain it, to keep it secure, to cut the grass.”
However, the most telling part of the article in my view was the following sentence:
“The exact scale of the government’s increased home ownership isn’t clear, in part because Washington hasn’t precisely tracked the homes.”
More of the same if you ask me.
While the Washington politicians decided to guarantee loans by at least 4 different government agencies, they are not even tracking the ‘problem loans.’ Any private institution doing the same thing with government money could and most might argue should be called before congress to testify and be held accountable.
This isn’t new, though. Many times, when Washington passes a law mandating behavior or ethics, the politicians through their actions or lack thereof appear to exempt themselves and government. It’s a slippery slope we’ve been on and we’re accelerating down that slope more quickly than ever. In my opinion, politicians are quick to forget they are elected to serve the public interest. Instead they work to advance their own careers, grabbing power and headlines, in order to sell books or get a lucrative career as a lobbyist when their days in office are over.
I’m sick of it.
When’s the next tea party?
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