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Friday, Nov. 20, 2009 | 2 a.m.
Sun Archives
- Cities, county find buying valley homes isn’t easy (11-8-2009)
- Federal funds meant to ease valley’s foreclosure problems (7-7-2009)
- HUD providing $18.5 million to help purchase foreclosed homes (3-30-2009)
- North Las Vegas eyes foreclosure solution (11-14-2008)
- State plan could ease pressure of ‘tsunami’ (10-23-2008)
Sun Topics
The Sun recently found that the three local governments receiving most of the money sent to the valley to buy, fix and resell foreclosed houses had been able to close deals on only five houses to date even though the program is nearly halfway into its 18-month time frame.
The U.S. Housing and Urban Development Department-funded project is aimed putting brakes on the decline of neighborhoods, and the plan locally had been to buy hundreds of homes.
But officials in Clark County, Las Vegas and North Las Vegas, which have a total of $60.2 million in Neighborhood Stabilization Program dollars, said the biggest obstacles to moving faster have been ongoing changes in rules and, more recently, the volatility of real estate because of investors swooping in. The same issues have occurred nationwide, making the program a good one to learn from.
Start with the way it was put together, says Alan Mallach, a nonresident senior fellow at the Brookings Institution who specializes in housing. In late 2008 well-meaning members of Congress “wanting to do something about the way foreclosures were affecting neighborhoods” tacked a program for addressing the issue onto a larger bill.
“The language was written in a couple of hours, in the wee hours of the morning, by somebody who made assumptions about what was going on, and what could be done about it,” Mallach says.
That language includes verbs such as “foreclose” in the past tense, which HUD then interprets literally and narrowly. The agency creates regulations authorizing municipalities to spend the money on houses that have been foreclosed on, but not on houses that are in the process of foreclosure. So when the market begins to create large numbers of houses in short sales, before foreclosure, municipalities are left in the cold, unable to compete for them.
It’s an example of how government programs need to be more sophisticated to deal with what Mallach calls “the moving target” of markets such as real estate.
Similarly, they need to be more flexible, he adds. For example, when federal rules required municipalities to purchase properties at a discount, to prevent local governments from handing owners windfalls courtesy of taxpayers, they didn’t take into account the possibility of investors coming back into the picture. “The investor doesn’t care what the fair market value is,” Mallach says. “When you have such a turbulent market, it’s hard to tell what that means.”
But in the end, there’s an even larger lesson: “Maybe we approached this in the wrong way,” Mallach says. “Instead of intervening, it might’ve been better off if the federal government had come up with regulatory measures and then let the market sort itself out.”
The underlying problem, after all, is that waves of foreclosures leave vacant and neglected homes, plummeting property values, vandalism and more-serious crime.
So some cities and counties are passing ordinances that require lenders to maintain properties once they are foreclosed on. Clark County is considering an ordinance that would raise fines on property owners who neglect upkeep. Fannie Mae is considering letting owners stay in their houses as tenants after foreclosure until a new owner appears, and then allowing them 60 days to vacate, Mallach says.
In the end, such complex problems as the collapse of a real estate bubble and ensuing foreclosures require “sitting down and analyzing the problem and how to solve it,” rather than rushing in to throw money, even when the problems create emergencies, he says.
Mallach predicts most local governments will spend the money within the required 18 months, but maybe not in the most effective manner. And so at the end, unfortunately, “the underlying goal of stabilizing neighborhoods may be out of reach.”
The bailout for mortgage companies was the WORST thing that could have happened. Thanks to that, prices are still artificially high. Banks can afford to hang on to properties and just let them trickle into the market instead of the flood and subsequent adjustment that would occur.
It does help a little that banks now have to keep the properties maintained and pay the HOA fees, but prices are not where they are supposed to be. Let the market take care of it self!
So what if people invested and lost their shirts in a bubble? That's not the taxpayer's (my) problem!
botfx
i agree government intervention rarely works
it 99% of the time causes more issues
Maybe we could tear down more apartment buildings, and create more homeless renters. Renters get nothing, and I guess deserve it. No tax breaks, sixty day notices or any other consideration. When are renters going to benefit from gov't help?
So, if the government cannot handle this issue, how in the world are they going to handle something as complicated as health care?? Leave gov't out and we will all be better off in the long run.
Just another half-baked Govt. program that is a waste of time and money.
The housing market will, eventually, sort itself out. We make not like how it does so; it won't be pretty, but the more or less free market will right itself in time.
the government should of broke up the banks into little ones, like Baby Bells when they broke up AT&T, when they bailed them out
There are places that this program does work. There are places that have drawn down a full thrid of its funds - they tend to be unbureaucatic and find ways to make the program work. Look at Pasco County, Jacksonvile and Pt St Lucie in Florida
I can just see it now....the owners foreclose,they stay in the house and "should" vacate within 60 days. Good luck. Who pays for the damage done to the house...Fanny Mae?
all these politician don't know what to do with neveda economy. god save us
Why aren't these LOCAL leaders of these agencies SCREAMING for change to our congressional representatives???? It's not as though they can't be reached and do something to adjust the language, especially with so much at stake!!
WTF??? What are these local leaders paid to do if not LEAD???? Sit on their asses and complain???
Give ME the $60 million to buy these houses and watch how fast I contact the powers-that-be to make sure it's working!!!!
Make the people concerned personally liable for the unecessary interest on the money just left hanging there. Watch them move then.
The government is not a business: What a joke!
it's the government we're talking about here, people. give all that money to our government and expect adequate results? ha! highly skilled at wasting money and time while providing poor service. just wait and see what happens if healthcare reform passes. it'll be even worse than canada. when brock lesnar had a hole in his gut he was in canada and they rushed him back to north dakota for treatment because the healthcare system in canada is so bad.
Same government that want's to control our health care.
We had a revolution in this country over a lot less. Maybe it's time for another.
Just a few more gov't workers sitting on thier ass not doing anything. What's new???? High salaries to sit around and do nothing, they probably don't even go to work.
Maybe if they got off thier ass they could beat the investor from "swooping" in. I drive by foreclosed houses all the time. Is this an agency that's linked to acorn. Maybe they could start some brothels, or is that what the five houses are being used for. Either that or thier relatives got good deals.