Sometimes you have to spin two problems into one thread to find a solution for both. The heaviest burden America's economy faces right now is the real estate depression that has only continued to sink property values and personal wealth for more than three years now. The greatest shame of our nation is the unreported poverty faced by the soldiers who have bravely, with noblest of intentions, fought our decade long wars. Homelessness is rampant among our returned troops but for every homeless vet on the streets, there are dozens of vets with families who can't afford to put a decent roof over there heads. Jobs are scarce, credit is tight. These young families, often conceived between stop loss tours of duty, are fated to be our next generation of poor, but President Obama has it within his means to make great change and he doesn't need Congress to appropriate any new funds to do it. It can be done.
Banks are currently sitting on a backlog of vacant homes in foreclosure. About 1.7M homes are in foreclosure, many abandoned, some forgotten. $30 billion in TARP funds were set aside for an umbrella housing program, known as Making Home Affordable. HAMP, which is the notoriously underutilized loan modification facility, is its largest component. So far, about $1.42 billion has been spent. Screws need to be turned on these banks to encourage them to sell these homes to veterans at the amount owed based on specific criteria:
- Honorable discharge having served in a wartime theater.
- Family with at least one dependent child.
That's it. No credit check. No income requirements. No downpayment or closing costs. It's as close to squatting as it gets. Failure rates will be high but it is giving people who were willing to give us their lives a chance at a better life. The chance to rehabilitate a families credit can be as important as the comfort of a permanent place to call home.
How do we finance this in numbers that are feasible? Easy peazey. Fannie and Freddie provide the financing as if Uncle Sam were a cosigner on the note. The principle bill is sent monthly to the buyer, the interest bill is sent monthly to the FHA who pay that out of the $40B slush fund they've been sitting on for over two years. After five years the entire principle/interest bill goes to the buyer. A decade to get your life together and let property values rise.
Let's presume that we put $20B into a "lockbox" for this program. This keeps nearly $8B in reserves for HAMP and other uses. The MHA could lock in $100B in loans at %4. That's enough funding to buy ONE MILLION HOMES at $100,000. Yes, most homes will be lesser homes in lesser neighborhoods if this is the price target but putting young families in lesser neighborhoods make those neighborhoods better. This program isn't intended to save underwater millionaire enclaves, its meant to save working class neighborhoods who are running out of working class families.
America needs a big program it can wrap it's arms around. Yes, troops aren't the only folks who deserve a break today but they are more diverse and subject to poverty than those who haven't served so this is a very ambitiously progressive policy. If their aren't enough applicants to fill the houses, the criteria can be expanded beyond the military.
I am sure my idea is full of wholes big enough to drive a Hummer through and I would like to here them. However, with no chance at further funding from the congress I think it is time we started bleeding the resources we have squirreled away since 2009.