Which candidate’s plan would best ease the mortgage crisis?
McCain and Obama differ on solutions, which could echo FDR’s during the Great Depression.
(Page 4 of 5)
In his real estate office in Stockton, Cesar Dias rebuffs talk of a “moratorium.”Skip to next paragraph
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He’s busy selling homes again, thanks to deep discounts on some of the roughly 9,000 foreclosures this year in San Joaquin County. He started a weekly “repo home tour” that buses buyers around to foreclosures – an idea that’s helped remove the stigma around such properties. Now some homes are getting multiple offers.
“A moratorium delays the process,” says Mr. Dias, who argues that the policy focus ought to be loan modifications. There are “some people who are not going to be able to be saved,” he adds, and in those cases a moratorium just holds up the reviving market.
So if buyers are reemerging, what if politicians did nothing?
One danger: Investors might feed on places like Stockton, turning former owner-occupied neighborhoods into high-rent zones.
“Heck, if this continues we’ll have a lot of cheap houses, sure you will. But you will also have a building industry that’s on its knees. You will have millions more homeowners who will be displaced,” says John Taylor, president of the National Community Reinvestment Coalition.
Those who benefit, he says, would be “bottom feeders” like hedge funds.
Vandalism a problem
The worry about rental conversion seems distant still to Jon Moore, chief deputy director of the county’s community development department. For now, the priority is getting people – owners or renters – back into vacant homes that now are targets for metal thieves and vandals. The problem is so bad that local governments here are pushing banks to hire Terlouw’s Greener Grass Co. to spray the browned-out lawns that are a dead giveaway of vacancy.
The county also anticipates receiving $9 million in new federal money to buy some of these vacant homes to fix up and then rent or sell. That’s maybe enough for 100 to 120 houses, says Mr. Moore. “It’s a drop in the bucket.”
A local nonprofit called S.T.A.N.D. does some of that rehab work already. The cheap prices ought to delight S.T.A.N.D., but staffers say it’s hard to commit funds when prices could drop further and when their low-income buyers are anticipating even better prices if they wait.
That wait-and-see attitude goes all the way to Wall Street.
“It results in irrational behavior on the part of the homeowners and lenders to game this thing – to wait it out [because] there may be a better deal down the road,” he says.
That’s an argument for picking a course and going with it.