Thursday, March 5, 2009

Foreclosure Help and Hurdles

I did a story on local reaction to the federal foreclosure prevention program announced this week. It was an eye-opener.

First, I got a call from the foreclosure counseling service I've been working with. Yup, I'm on the edge of the precipice along with a lot of other people. And I'd been told there was nothing for me because I haven't missed a payment yet.

But today I was told that the new program has provisions for people who haven't stopped paying their mortgage, whose income to loan ratio is way out of whack thanks to the economy. That's heartening. We didn't buy a house to lose it, but the recession knocked our income on its butt and we've been squeaking for months.

But then I spoke with Republican NY Assemblyman Joel Miller and heard the opposing philosophy in a nutshell.

"We don't have the money to bail out people who are in homes they can't afford," he argued. "People who are still paying their bills will end up paying the tab and that's unfair."

It's the laissez faire argument. Let the chips fall. But as with most things, there are a number of problems tangled into this that one side or the other tends to ignore.

Yes, people who are managing to tread water shouldn't be pulled under by the drowning. Yes, speculators or greedy people who were buying and selling as a business probably should lose out. They gambled and they lost.

But empty houses pay no taxes. And that gap means raising taxes for the people who are left. And empty houses devalue the neighboring homes....continuing the negative spiral that's already leaving us gasping for breath.

The mayor of a local city sounded really angry about the taxes his citizens have to pay. "It's time for the way taxation is done in this state to be reformed. New York is taxing people out of the state!"

And there's another knot in the tangle. Government is a mess. The way spending is handled has been so distorted, so convoluted, that you need a map to figure out how it's done. I doubt it's just New York. There is nothing simple about any of it.
It's so complex we have to pay people or buy software to figure out how much tax we have to pay. And once government has it, it begins its journey into the slithery depths of the bureaucracy.

So how do you argue against preventing foreclosures unless you're prepared to rip open the doors and windows, shine a light on that deep money hole, put on your visor and start counting and accounting for every single penny? And then start making the path from income to spending a more direct line?

It's revolutionary. It goes against every unwritten rule in every legislature in the land. And it may be the only thing that will prevent this from ever happening again.

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