City Council Passes Foreclosure Prevention Bill
posted by on May 12 at 18:17 PM
The city council unanimously passed a bill this afternoon intended to help homeowners avoid foreclosure on their house, townhouse, or condo. Under the Office of Housing Foreclosure Prevention Program, qualified borrowers—making 80 percent or less of the average area income—can receive a one-time, interest-free loan of up to $5000 toward past-due mortgage payments.
But in the face of a national lending crisis sullying the national economy, the council’s measure seems mostly a gesture. The city’s total allocation for the program is only $210,000 (including $10,000 for administration costs), thus it could only prevent—or just delay—foreclosure of about 40 to 50 homes.
“The reality is, compared to the cost of home, a maximum loan of $5000 is very modest,” said Councilmember Tom Rasmussen before the council voted. “How can this amount help them out?”
Richard McIver, the bill’s sponsor, acknowledged that it wouldn’t “handle all the ills of the housing world today.” But he also said the bill was geared toward people only slightly behind on payments and assessed as being capable of repaying the loans.
“This helps provide two to three months of mortgage payments to bring [homeowners] current,” McIver told the council. The goal, he said, is for borrowers to get caught up so they could refinance their mortgage to manageable monthly payments, or sell the property.
“There are a lot of people out there who are one illness away from being foreclosed upon,” said Councilmember Bruce Harrell, who sits on the council’s Housing and Economic Development Committee.
Nonprofits Solid Ground and the Urban League will administer the loans. Calls to the organizations to find out who will qualify and how homeowners can apply haven’t been returned (the Urban League’s foreclosure hotline is (800) 368-1455). Also, calls to the Mayor’s office to determine whether Nickels could freeze the funds—as he recently did to a fund to assist renters displaced by condo conversions—haven’t yet been returned.
In cases where the loan application is approved, the city would send money directly to the lending bank, and the borrowers would repay the city—but that could take decades. If recipients fail to maintain their mortgage payments again and the bank ultimately seizes the home, the city likely wouldn’t be repaid.
At first, only 40 or 50 homes. But when those people start paying it back, then the money can be used to help others. Or am I kidding myself here?
At some point you have to stop pissing good money after bad and get out of a house you cannot afford. I can see when you are talking about a temporary set back ,but when you make 50k and are in a house costing 500k which you could only afford with a teaser 2% mortgage, nothing short of free money is going to make that work.
What we need to do is have a holiday for loan forgiveness counting as income, and set up a system whereby people who are in houses they cannot afford can surrender them to the lender, or sell them in satisfaction, and have a lesser ding on their credit, say three years.
Get people out of places they will never afford and allow them to start renting again with a housing payment they can afford.
elenchos, you're fucking dreaming.
I don't think this idea is as heinous as others but almost everyone is one illness away from doom and gloom.
Eh, it's just a little harmless pandering on the part of the city council.
I'm cool as long as nobody starts talking about anything resembling a real bail-out.
Moral hazard alert.
@4,
Not to worry - they also voted today to spend $15 million to buy property back from Paul Allen (what the City sold him!) to start work on his otherwise-unfunded $200+ million Mercer/Valley beautification project.
They (oops - we) can only afford to bail one property owner out at a time...
...typo alert, "that the City sold him"
I'm also irresponsible with money. May I have a $5000 interest free loan I have no intention of paying back because hey, like I said, I'm irresponsible with money.
The responsible renters paying sales tax and property tax via their landlord won't mind because hey, otherwise housing demand would drop and they might be able to buy a place just like me.
AMIRITE?
Yeah....I have to say that I hate people losing their homes, but once again, let's make provisions for people who can't make their mortgage payments and do nothing about people who lose their apartments due to condo conversions or astronomical rent increases. As a renter (a perpetual renter - I'll never be able to afford a house unless I win Lotto), I feel like a second class citizen. And don't even get me started on the tax breaks.
Let's throw away money!
And guess what -- other people pay for it!
The program is limited to people making 80% median income or below. Why are these people buying houses in the first place? When I had a crappy job and made no money, I rented an apartment. Before that, when I made even less, I had roommates. This is a program for people who in many cases qualify for federal housing subsidies, yet for some reason felt it wise to buy a house. If our city council wants to send taxpayer money to these people, send the $5k in the form of rent payments.
oh boy... i just don't know where to start. i guess i knew all this shit was inevitable, but i'm still very disappointed in our elected officials.
God, I wish I'd bought a house I couldn't afford - I could be getting free money from the city right now!
I was responsible, realized the offers were too good to be true, and kept renting. How could I have been so stupid?
Will Harrel? How about Councilmember Bruce Harrell...or is this a joke?
14) Jesus, I am stupid. Will Harrel is the former head of ACLU Texas. Yours truly, William Holden...
Oh...that makes sense. I was worried you were daydreaming about Will Ferrell! And stop it with that "stupid" talk!
It's beyond ironic - sad actually - that the council can make some money available to 'homeowners' caught in the foreclosure nightmare, but is unable to effectively provide funds to renters who are being evicted due to condo conversion, etc., even when they are at risk for becoming homeless.
Seems kind of a double standard, and one that should start coming back on them, since renters are now the majority of the population in Seattle, and will only continue to be a larger and larger share of the electorate here. You'd think renters would start flexing their political muscles to get a more level playing field . . .
sadly, Bellevue Ave is right @3.
When the city tries to tackle problems like this, it's like putting a Band-Aid on a shrapnel victim.
I'm not going to cast many moral dispersions on this bail out, because I will probably personally benefit most - as a renter - from these people staying in their homes and not causing a wild surge in the already overly-competitive rental market (in San Francisco).
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