This Housing Bill Doesn't Need Fixing Up
I was glad to see The Post's editorialists focus on a vital element of the housing rescue package that is scheduled to come to the House floor today: desperately needed assistance to state and local governments to stabilize neighborhoods devastated by foreclosures. ["Congress's Fixer-Upper," editorial, July 22]. But I strongly disagree with The Post's objections.
This program is not a bailout for irresponsible lenders; nor is it likely to be dominated by giveaways to political cronies. The many local officials and community-based nonprofits my subcommittee has heard from are in no mood to give sweetheart deals to the financial institutions owning these properties -- many of which made bad subprime loans in the first place (and, increasingly, are being sued over past lending practices by cities such as Cleveland and Baltimore).
Nor will lenders have an incentive to foreclose when foreclosed properties are fetching only 30 to 50 cents on the dollar upon resale, far less than a successful loan workout would yield.
The Post suggested imposing an unwise safeguard -- limiting program eligibility to properties foreclosed on before enactment of the bill. It would be a grave mistake to handcuff mayors and governors addressing the problem of foreclosed-on properties rather than give them the flexibility to craft responses as the problem evolves, such as when rate resets on subprime adjustable-rate mortgages made late in the boom devastate new neighborhoods.