If the Congress is correct in their figures then I am wrong and it will only cost us tax payers three trillion dollars to bail out the mortgage industry. With the pork they have already loaded the bill with just to get people to sign it in the House we all should know by know that it will cost more than the trillion dollars they initially asked for under the guise of 750 billion.
The Congressional lack of understanding in business is shining through once again. Unless Congress re-writes its charter, there is a little fact that gets in the way of their ignorance. Freddy or Fanny and the GSA are forbidden to own or hold any private property longer than 180 days without putting it up for auction. So if property is foreclosed upon then the GSA must sell it to the highest bidder after 6 months. I think this is why the Congress wants to create a new agency to handle the mortgage crisis one that can hold those properties longer. The President was going to get rid of them as fast as possible if they fell under the control of the GSA. Have you ever been to a GSA auction? The last one I went to was at the Kennedy Space Center, where there is a regional office of the GSA, I watched a nearly new Rolls Royce sold for 9,000 because that was the highest bid. It did have a few bullet holes in the trunk but other than that and the blood stains some lucky guy drove away with a 240 grand car for 9 grand, what makes you think that if the GSA had a million homes nation wide they would not be selling for a dollar a piece? There is one catch, once you have bought the property at their auction you are on the hook to the bank for any unpaid mortgage. This will mean we would not need to take a trillion dollars of tax payer money to buy up the bad mortgages and people that can afford them can buy them.
The Congress killed that idea so they came up with this bail out bill that will further choke the economy.
All the confiscated property from drug dealers and mobsters is turned over to the GSA for sale. If Freddy and or Fanny foreclosed on the bad mortgages they would have to get rid of them as quickly as they can, providing bargains for the people in the know. It was a very smart idea to do this but what would the Congress know about doing things smartly?
Their grand idea is to buy up the bad stuff and hold it for years with a new agency. The government would be forced to maintain the property at government expense, I know because I am writing a proposal for my company to manage the properties in my area and it won’t be cheap.
This is where it starts to get expensive. The federal regulations for the maintenance of property is very strict and costly, grass has to be cut, security has to be maintained, cleaning has to be done, if there is a pool it has to be maintained which means power has to be kept on the property so the electric bill must be paid each month and in the northern part of the country snow has to be removed from the sidewalks and in some cases the roofs to protect them from collapse. The trillion dollars to buy the bad properties is only the first and cheapest step. The next step is maintaining the value of the home, what does it cost to maintain your home? Multiply that by a million homes and you can see that this will become very expensive. Then you have to do record keeping of each property, that costs money too, and you have to list it for sale, a small home will cost five hundred dollars a month to maintain, a large home will run you two thousand dollars a month and if it has a pool it will cost an extra three hundred dollars. So using averages of $1,000 per home times a million homes comes out to about $1,000,000,000 per month times five years comes out to about 60 billion dollars on top of the trillion in the initial buy. Don’t forget the five to fifteen hundred dollars to initially secure the property per federal regulations and the same amount to get it ready for sale. Multiply that by one million homes and you can see that the Congress is going to be spending our tax dollars for the next five to eight years waiting for the market to absorb those homes while home builders and homeowners wanting to sell will be competing with older homes that have been vacant for five years. It will slow down the rise in property values and at first will cause property values to drop by about 12% to 15%. Yeah the people that are still paying on their homes will love to know that their property just lost another 12% because the neighbor was foreclosed upon and the government picked up the tab.
Less homeowner’s in the area will mean higher property taxes to make up the loss in local government revenue because the Federal Government is exempt from property taxes and until the home is sold local governments will be bleeding dollars. This means that there will be layoffs in local fire and police so crime will go up. People will move out of the area if they can or abandon their homes if the crime rate is too high leaving even less property tax payers. Yup, I can see where this is heading and it won’t be pretty for the first decade or two.
Great job, why listen to a president with a business degree when we can listen to lawyers that never ran a business and allow them to make business laws?
