Uh oh, they’re from the government and they’re here to help the housing market recover. “They” are President Barack Obama and Housing and Urban Development Secretary Shaun Donovan. They have a new program called First Look, which gives state and local governments and nonprofits first dibs on purchasing foreclosed properties for “affordable housing.”
Obama and Donovan maintain that competing with private investors will “hinder their efforts to stabilize neighborhoods with high foreclosure activity.” In reality, it’s the Washington, D.C., politicians and bureaucrats who are doing the hindering.
One investor recently bid $300,000 for a bank-foreclosed property in New Hampshire only to see it turned over to First Look participant Fannie Mae, which sold it for $199,000. Another prospective buyer offered the full asking price — in cash — for a foreclosed home in an upscale neighborhood, but had to wait nearly two weeks until First Look groups were given the first shot at the property. So, the same meddling bureaucrats who came up with the abject failure known as the Home Affordable Modification Program are now blocking sales of foreclosed homes to ready, willing and able buyers. What are they smoking?
The second highest number of foreclosures on record were reported in July. Real estate sales plummeted 27.2 percent despite the lowest interest rates in a generation, an $8,000 first-time homeowner tax credit and 30 percent price reductions from 2006 peaks. The record-low sales led Lawrence Yun, chief economist of the National Association of Realtors, to predict that it may take more than a decade for homeowners to recover equity lost in the past two years. With a record-high inventory of almost 4 million unsold homes, Housing and Urban Development should be encouraging private investors to take as many foreclosed homes off the glutted market as possible. Why is it that politicians and bureaucrats so often do the exact opposite of what’s needed?
Not only is First Look the wrong approach to help the housing market, it invites corruption by groups like the Associations of Community Organizations for Reform Now, or ACORN. Consider NeighborWorks America, whose chairman is a director of the Federal Deposit Insurance Corp. The group “assists over 3,000 community-based organizations and oversees the support of a national network of more than 240 affordable housing and community development organizations.”
Sound familiar? It should. NeighborWorks CEO Kenneth D. Wade was one of 50 people arrested in a 1969 public welfare riot in Springfield, Mass., with Wade Rathke, ACORN’s founder. NeighborWorks’ 2009 annual report states that it awarded “nearly 22,000 training certificates ... to affordable housing and community development professionals from more than 3,600 organizations and municipalities.”
This ACORN-like army, financed by taxpayers and federal stimulus beneficiaries, is picking up where ACORN left off. First Look will only make things worse.