Don't leave us to foreclosure (A messaage to the President)

New Orleans Times Picayune ^ | 9-29-06 | Times Picayune Editorial

[Uncle Sham]

Don't leave us to foreclosure Sunday, January 29, 2006 Here in a community full of ruined homes, it takes no imagination to predict an epidemic of foreclosures that could devastate families, cripple the recovery of greater New Orleans and strain the nation's economy. If your flood insurance payout isn't nearly enough to cover your mortgage, you wonder if you'll have to abandon your unlivable home. If you look down the block at a dozen other damaged houses and know that your neighbors are in the same bind, you understand the fear of losing your neighborhood to blight. If you travel daily past block after block of empty, flood-marked houses, you understand how large the hole in our economy could become. This explains why U.S. Rep. Richard Baker is not giving up on his proposal for a federally backed buyout of flooded-out homeowners and small business owners. He wants Congress to create a corporation that would release Hurricane Katrina's victims from their mortgages, sell bundles of property to developers and help get storm-ravaged land back into commerce.

[A.Hun]

I am not aware of federally guaranteed mortgages.

Of course we had to bail out the S & L's years ago...

[festus]

I sure as hell would not rebuild a home or a business in the flood zone until...

Herein lies the problem. There should never be any circumstance that would lead folks to build in flood plains. And if there are circumstances it should not involve my tax dollars.

[CobaltBlue]

the President should have reduced Louisiana to a territory, brought in the military, and tossed the politicians in that ex-state into federal jails

Well, I sympathize with your frustration but the Constitution won't allow it.

It's a mess, and it's not going away, either.

Adults need to act like adults. The mortgages are federally guaranteed. The student loans are federally guaranteed. The credit cards and car loans are not federally guaranteed but the banks are.

Something like 300,000 Americans are suddenly impoverished and living in hotels. You can tell them to pull themselves up by their bootstraps all you want, but if they qualify for federal assistance, they will get it.

So, what are the real options here?

[SAJ]

Friends or not, it won't happen. Such an action is **expressly** prohibited by the Constitution. This idea is, however, a good measure of the general corruptness and utter stupidity of LA politicos.

Not to say that other states' pols might not be as corrupt and/or stupid, merely that they don't happen to be under the national microscope at the moment.

[Texan5]

Here if you build or buy in a flood-prone area, you must buy separate flood insurance or your loan will not be approved. If your home or business is seriously damaged by a flood, your insurance pays you for the damage and you choose to re-build it in the same place, that insurance will not re-write your policy. In most cities, and even in this rural area where I live you are not allowed to build in a floodplain, although some people in isolated areas do manage to get away with it-but their insurance will not cover if they get flooded. Why is it that the banks of NO did not send out any real estate inspectors when these homes that are now gone were built/bought? As a taxpayer, I'm really not interested in paying any more money than I do now for stupidity, whether it is that of a bank or an individual.

[Howlin]

Not to say that other states' pols might not be as corrupt and/or stupid, merely that they don't happen to be under the national microscope at the moment.

Absolutely!

[CobaltBlue]

I am not aware of federally guaranteed mortgages.

Wow. Do you own your own home? Ever hear of HUD? Fannie Mae? Freddie Mac?

Of course we had to bail out the S & L's years ago...

Different program. That was FSLIC. Sort of like FDIC. You do know what FDIC is, don't you?

[CobaltBlue]

There should never be any circumstance that would lead folks to build in flood plains. And if there are circumstances it should not involve my tax dollars.

Ask your congress critter to change the law, then. In the meantime, we're stuck with the laws as they are.

[cinives]

It has nothing to do with Bush and everything to do with the residents of NO asking for handout after handout.

How does it make economic sense to rebuild those parts of a city protected by inadequate levees and sinking further below sea level every year ?

I don't care if it is in the form of loans - if you can't get it from a bank(or other private institution), it's not worth doing. So you take a loan from the government at whatever interest rate, and another hurricane comes along next year. Gonna stick it to the taxpayer again, or what ?

Move to higher ground, folks, the rest of the country is tired of subsidizing this stupidity.

In case you're wondering, I don't like student loans either.

[marajade]

Did the citizens of San Francisco cry to the Feds when they had that devasting earthquake in 1906?

[CobaltBlue]

Michelle Malkin on Fannie Mae and Freddie Mac -- most people who worry about the potential collapse in the housing boom are worried about the taxpayer eventually having to bail these two institutions out if they go belly up.
http://michellemalkin.com/archives/000569.htm

The point of the Baker Plan to bail out New Orleans is to keep that from happening, because it will be very much worse for us all in the long run. Baker's an expert in mortgages, so he's got a good handle on this.

[Buffettfan]

Nobody in their right mind would move back to a city that is below sea level (especially after the Katrina devestation) and has a crime rate 10 times the national average (unless of course you depend on the government to take care of you).

[TheBrotherhood]

I agree 100%.

People who buy/build homes in flood-prone areas are aware of the risks. The higher the geographical risk, the lower the costs to build or buy. So, why do they buy homes in such areas? The answer is because they save a bundle of money. They could put those initial huge savings in a sinking fund and add annually to the fund a modest amount for when the rare and unusual event takes place. They could withdraw from this fund to buy flood insurance, etc. But most buyers don't establish such a fund, safe in the knowledge that other taxpayers, who purchased in less risky areas, will eventually be forced to pay for the damages.

Nice sheme.

[TheBrotherhood]

Nice sheme = Nice scheme.

[CobaltBlue]

The article is about the consequences of massive foreclosures due to massive default by the very same people you are urging to abandon their homes.

If they abandon the home, do you expect them to still pay the mortgage? Get real.

If the state takes over the property and turns it back into a wetland, then the property owner is entitled to just compensation pursuant to the Fifth Amendment to the United States Constitution, at fair market value.

The Baker Plan is to offer those same property owners 60 cents on the dollar now, cash money in hand, and the federal government takes over the property.

[sinkspur]

This measure was not a gimme program, it was a loan, to be repaid by those who redevelop the properties. What's wrong with this approach?

What if nobody, or very few, buy the properties?

Would you buy property in an area below sea level with defective levees?

If nobody buys the properties, then the taxpayers are stuck with the bailout.

[Blackwatch2]

yea, and the schmucks in New Orleans were woefully unprepared right in the face of a very well known threat.

[G.Mason]

" So, what are the real options here?"

First, get rid of the notion that the president never does enough.

Second, get a government that is working for their citizenry. I would suggest like that in Florida.

Hurricanes (three of four) that hit Florida in 2004 ...

Charley, August 13th, 2004 ... Category 4 ... hit at 145+ mph

Frances, September 4th, 2004 ... Category 2 ... hit at 105 mph

Jeanne, September 26, 2004 ... Category 3 ... hit at 120+ mph.

Or perhaps a government like Mississippi?

Anything but the felons that are ruling Louisiana.

[sinkspur]

If the state takes over the property and turns it back into a wetland, then the property owner is entitled to just compensation pursuant to the Fifth Amendment to the United States Constitution, at fair market value.

What is the "fair market value" of a home in a neighborhood that will not be rebuilt?

It would be cheaper to just pay off what remains of the mortgages. Nobody is guaranteed a return on a home destroyed but with no insurance.

[Uncle Sham]

"It has nothing to do with Bush and everything to do with the residents of NO asking for handout after handout."

Guess what, I'm tired of that too. This isn't a "handout" and won't cost you a penny. In fact, it might actually save you money as I'll explain later on.

"How does it make economic sense to rebuild those parts of a city protected by inadequate levees and sinking further below sea level every year ?"

Guess what, it doesn't. This program would help to ensure that it won't happen because homeowners in the lowest parts of town will gladly accept sixty percent of the pre-Katrina value this agency will offer them. Then, this agency will own and be in complete control of those unihabital areas and will be able to develop them as deemed fit (parks, etc.) This will prevent the type of rebuilding you fear you'll have to pay for later from another flood. This is a wise investment in that sense that cost you nothing. Another savings to you comes from the fact that these loans are being bought for sixty cents on the dollar. You are on the hook for the insurance of these loans as stated earlier by CobaltBlue. This program offers you a chance to pay 60 cents on the dollar for these properties. Without it, if owners can't pay, you're gonna be paying the whole dollar. That's another savings to you.

"I don't care if it is in the form of loans - if you can't get it from a bank(or other private institution), it's not worth doing. So you take a loan from the government at whatever interest rate, and another hurricane comes along next year. Gonna stick it to the taxpayer again, or what ?"

This is not a loan to the individual property owners but a loan to an agency set up to purchase and redevelop their properties. If left to individual property owners, there is no guarantee that the city will be able to keep them from rebuilding in unsafe areas.

" Move to higher ground, folks, the rest of the country is tired of subsidizing this stupidity. "

Guess what, that's EXACTLY what this plan is designed to do, at no cost to you. Stupidity ignores this plan.

"In case you're wondering, I don't like student loans either."

Student loans are worth the investment to our nation in the long run, otherwise you end up with a lot of government cattle herds.