The Foreclosure Bill

Randy Kuhl was the only Western New York Republican to vote against the Foreclosure Prevention Act. An Olean Times-Herald story includes his explanation for the vote, and Massa's critique.

Kuhl repeats the Bush Administration line that one portion of the bill, $3.9 billion in grants for towns to secure foreclosed housing, was too generous. Unlike the Bush Administration, Kuhl also opposes the federal bailout of Fannie Mae and Freddie Mac.

Kuhl's opposition to the Fannie/Freddie bailout makes sense. Even though those institutions are a weird federal/private hybrid, they issue stock, and the stockholders should lose that equity before any bailout. We have a quaint little tradition in this country called "capitalism", which seems to have been forgotten of late by the supposedly conservative, market-driven Bush Administration. The market is operating just as it should by devaluing Freddie and Fannie stock. There's no tragedy there.

But Kuhl's opposition to the $3.9 billion in grants makes no sense. It is in our national interest to help towns and cities where a lot of foreclosures have taken place. Those towns didn't create the mortgage crisis, and allocating money to let those towns board up or demolish abandoned homes is no different from helping after a flood or tornado.

If we were feeling the heat of the mortgage crisis in the 29th, this vote would have been political suicide. As it is, I think it will be forgotten, despite Massa's best efforts to make it an issue.


When the bank forecloses, won't these properties be sold at auction? Should not the new owners (who probably got the property for a song) be responsible for fixing the property?

In theory, yes.

In practice, servicers are months behind on their foreclosure lists. Hard-hit communities empty houses sitting around that could be vandalized, serve as crack houses, etc.

Vacancy rates for homes are at an all-time high. Buyers just aren't buying.

I can't find the link right now, but earlier today I read a story about a bank auction where a house that had been valued around $100k couldn't be sold for less than $10K. Some of these properties are write-offs. The amount of fraud and poor judgment is staggering.

Can a city, village, township condemn a house, tear it down and charge it to the mortgage holder?

I think so, but what does "mortgage holder" mean anymore? Since those loans are sold right away and bundled, do you think the deed information is up to date?

(I'm asking, I don't know the answer.)

I'll bet in a lot of circumstances, the city will have a hard time re-couping its money.

I know nothing of Mr. Kuhl, or the reasons why he voted against the bill.

What I do know is that that bill has major flaws, and overwhelmingly favors mortgage lenders.

And despite the populist rhetoric, some of the major players in this legislation from your state have some interesting ties.

An interesting exercise would be to pick the 3 or 4 highest-profile Congresspeople in your state and see who their biggest contributors are.

There are many, valid counters to this argument for the 3.9 B, but I'll mention just one here:

A large contributor to foreclosure in many urban areas is the obscenely high tax rates, which contribute to the lack of affordability. For some municipalities, an inordinate percentage of the monthly payment goes towards taxes. Despite falling valuations, they continue to take their inflated pound of flesh. Most property tax systems are rigged to continue to go up, but almost never do they go down.

Are they willing to help ease the burden?

Have they made any substantial and LEGITIMATE commitment to help their citizens?

Shaking their fists at lenders doesn't count, when most of these fiefdoms are as proficient at wasting money as our federal government.

I agree that the bill favors the mortgage industry - actually, that it favors the big-money investors over the taxpayers who are funding the Fannie/Freddie bailout. And I'm not surprised that some of our delegation got huge bucks from the mortgage industry, because most of those companies are headquartered in NYC.

As for the property tax issue, I haven't seen any major analyst mention it as a contributing factor to the current mortgage crisis. In fact, despite the constant complaints about property taxes being so high in NY State, we haven't been hit by the bubble. Bubble areas are places where taxes are actually lower: Florida, Southern California, Arizona.

The Washington Post has issued their list of the top 100 paid executives:

The list is full of Fannie Mae, Freddie Mac executives. I didn't count them, but it looks like at least 10 of the top 100 paid executives in the USA work at Freddie/Fannie.

What the heck is this? They should all be fired yesterday and to heck with bailing out these loosers.

My mistake, after further research I notice that the list is of the top 100 paid execs in the Washington DC area - but I don't take back my remarks about firing them or not bailing them out

Yep. How it should work is that the board of directors should can those guys.

But that's not gonna happen. Instead, we're paying.