As Dennis Prager neatly illustrates, is now really the time for Joe Biden and other leftists to be advocating…
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Image of the Day: Defund Police, While Crime Spikes Upward?

As Dennis Prager neatly illustrates, is now really the time for Joe Biden and other leftists to be advocating "Defund the Police?"

 

[caption id="" align="alignleft" width="664"] Not the Time to Defund Police[/caption]

 

 …[more]

July 31, 2020 • 02:19 PM

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Jester's CourtroomLegal tales stranger than stranger than fiction: Ridiculous and sometimes funny lawsuits plaguing our courts.
Secret Fed Housing Giveaway Endangers Local Recovery, Safety Print
By Ashton Ellis
Wednesday, August 29 2012
From the looks of it, the FHFA’s pilot program manages to turn a failed bailout of bad loans into the opening wedge of a massive change in federal housing policy.

Unless Congress acts quickly to stop a federal pilot program to convert thousands of foreclosed houses into long-term rental properties, homeowners in once thriving communities will likely see their property values plunge and crime statistics jump. 

When the housing bubble burst in 2008, Congress had two options.  Either let the market bottom out naturally so home prices could find their equilibrium, or bail out subprime borrowers by guaranteeing payment on millions of bad mortgages held by government-sponsored entities Fannie Mae and Freddie Mac. 

You remember which route Congress chose. 

Part of the justification for bailing out Fannie and Freddie was to keep millions of homes from being foreclosed.  That failed miserably. 

Another claim was that taxpayers would be made whole after being forced to extend Fannie and Freddie an unlimited credit line – $190 billion and counting since 2008 – while government housing experts try to turn trillions in bad loans into financially viable investments. 

But that, too, has failed because of repeated government interventions in the housing market that keep the true price of homes from being discovered.  Absent a major change in policy, federal officials will continue to own millions of underused properties at a huge loss for taxpayers. 

That’s where the Federal Housing and Finance Agency comes in.  FHFA is the congressionally appointed conservator of Fannie and Freddie’s assets. 

In order to escape its dilemma, last year FHFA announced a policy change.  In a news release dated August 10, 2011, FHFA said it wanted to “explore alternatives for maximizing value to taxpayers and increasing private investment in the housing market, including approaches that support rental and affordable housing needs.” 

In the same news release, Shaun Donovan, Secretary for Housing and Urban Development, emphasized the switch in policy focus from owners to renters:

“Millions of families nationwide have seen their home values impacted as their neighbors’ homes fall into foreclosure or become abandoned.  At the same time, with half of all renters spending more than a third of their income on housing and a quarter spending more than half, we have to find and promote new ways to alleviate the strain on the affordable rental market.  Taking steps to encourage private investment in REO [real estate owned] properties and transition them into productive use will help stabilize neighborhoods and home values at a critical time for our economy.”

In other words, if owner-occupants won’t come forward by the millions to save the government from its bailout-created mess, then federal officials will group together foreclosed houses in bulk and repackage them as long-term rental properties. 

Outrage at FHFA’s policy shift is building, especially in California.

It’s easy to see why. 

The FHFA pilot program being implemented within the next month is slated to affect 2,500 houses nationwide.  Five hundred – or one-fifth of the total – will be in California’s Los Angeles and Riverside counties alone. 

Critics have many grievances. 

For the California Association of Realtors, it’s the rampant secrecy of the program’s participants.  Recently, the association knocked FHFA and Fannie for “refusing to disclose any details, such as property locations, final property count, sales price, or names of winning bidders.” 

Based on information gleaned from FHFA’s website, it appears as though the agency is using 2011 home values to market the bulk properties to unnamed institutional investors like hedge funds.  If true, this means that the investors secretly negotiating with FHFA would reap a financial windfall since 2012 home prices are higher on average in Los Angeles and Riverside counties than a year ago.  The result would be particularly distasteful for taxpayers because it would mean receiving less than the current market value for property held by the government. 

Members of California’s congressional delegation representing counties affected by FHFA’s pilot program aren’t happy either. 

In April of this year, nineteen members from Inland Southern California – 10 Republicans and 9 Democrats – sent a letter to the head of FHFA reminding him that the bulk sale program is inappropriate for their region because, “Current foreclosure listings are sold in less than 60 days of listing and the properties sell for close to or above the asking price.” 

When that failed, one of the members, Republican Gary Miller, introduced a bill to exempt California from the FHFA’s pilot program. 

It’s languishing in a congressional subcommittee.

But beyond yet another unseemly federal giveaway to politically connected investors, the biggest negative impact of FHFA’s policy is likely to be suffered by homeowners in neighborhoods targeted by HUD. 

When the last housing bust hit Southern California in the early 1990s, HUD policymakers thought they had the answer by selling groups of houses to investors as rental properties.  The results should alarm any owner-occupant living in a neighborhood where HUD’s “affordable housing” policy will be introduced. 

According to research by economist John Husing, an expert on Inland Southern California, three things happened the last time bulk renting was tried in the area – calls to police increased, property values fell and school districts saw a rapid turnover in their pupil populations.

San Bernardino, a city that made national news recently after declaring bankruptcy, was one of the victims of the federal government’s rental craze.  With the region’s lowest housing values thanks in part to an overabundance of rental properties, San Bernardino became a magnet for low-income and transient residents.  In Husing’s view, the city’s inability to pay its creditors “is not totally unrelated” to the federal government’s policy of transforming its neighborhoods into rent-heavy districts. 

From the looks of it, the FHFA’s pilot program manages to turn a failed bailout of bad loans into the opening wedge of a massive change in federal housing policy.  Unless Congress can be roused from its complacency, thousands if not millions of non-bailed-out middle class American families could suddenly see their neighborhoods change for the worse by the presence of long-term rental properties next door.

Question of the Week   
A U.S. national spelling competition has been held annually since which one of the following years?
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"The Supreme Court handed President Trump another victory on his signature immigration agenda Friday, refusing by a 5-4 vote to temporarily block construction of a wall at the southern border with Mexico.Groups like the Sierra Club and the American Civil Liberties Union had asked the court for a temporary stoppage of construction while they argue their case that the administration illegally transferred…[more]
 
 
—John Solomon, Just the News Editor in Chief
— John Solomon, Just the News Editor in Chief
 
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