Foreclosing on the Future

By James Preston Allen, Publisher

The Federal National Mortgage Association commonly known as Fannie Mae, was founded in 1938 during the Great Depression as part of the President Franklin Roosevelt’s New Deal. It is a government-sponsored enterprise (GSE), though it has been a publicly traded company since 1968. It is one of the ways the U.S. government stimu lates the economy and creates wealth for both homeowners and the private banking industry.

This is the part that Texas Gov. Rick Perry doesn’t get about Washington’s relationship to Lubbock, Texas.

Due to the sub-prime mortgage crisis, they were left with a couple trillion dollars in debt on the loss of home values particularly in areas such as Las Vegas, Florida and Southern California. If the government hadn’t stepped in to back up these two GSE’s, the real estate market would have crashed even harder and few lenders would be able to continue making loans. Even still, there are now some 1.5 million homes that have been foreclosed on and as of July 2011, 63,360 homes were in Los Angeles County.

Though a significant number of foreclosed properties are owned by banks such as Bank of America, Wells Fargo and Chase, the German owned Deutsche Bank also has a considerable number and was recently accused by the City of Los Angeles as being a “slum lord” for failing to maintain foreclosed properties. However, Fannie Mae and Freddie Mac have the most of these mortgage notes and recently were publicly asking for ideas on how to sell them off without depressing the market even further. This has brought out a significant amount of speculators hoping to scoop up properties at depressed values of 35 - 50 percent of their all time high values. The banks have been slow to sell off these foreclosed properties out of fear of further depressing the market values and have significantly screwed up the legal process of foreclosing on many homeowners and failing to adequately adjust rates even when given government incentives.

The current trend in political economics would tend to drive the foreclosure market into the hands of the private sector investor and leave the public once again holding the debt bag. Yet, there is an age-old solution that makes more sense. Back in the days of the westward expansion in these here United States of America, there was something called “homestead- ing” that gave free land to anyone brave enough to venture into the hinterlands and make a go of farm- ing in the plains. The idea was that the government owned all this land had a growing population that needed some place to go. The fron- tier was the place to expand.

My great, great grandfather homesteaded land near Lawrence Kansas back in the 1870s as did the ancestors of millions of Americans today. It made sense. Today we again have a growing popu- lation and a lot of vacant, foreclosed property, and instead of giving it to the “haves” why not turn the “great recession” around by letting people earn home ownership with a little “sweat equity.” This is the same concept that is used by Habitat for Humanity. Founded by Millard and Linda Fuller, in Americus, Georgia in 1967, it was later made famous by President Jimmy Carter.

If Fannie Mae were to partner with non gov- ernmental organizations like Habitat for Human- ity, whose goal is to end homelessness and pov- erty, the millions of foreclosed properties that now plague our cities would be put back into service, restored and repaired and not resold on the open market for a significant time. This is a doable project that would put many thousands of people back to purposeful work, stimulates the construc- tion industry and save the federal government bil- lions in debt support, while saving the real estate market from a flood of unwanted properties sold at a discount.

The old adage that “charity starts at home” applies here. But this is not so much a handout as it is a hand-up for the many thousands of Ameri- cans who have lost everything in this recession– their jobs, their homes and their sense of self- worth. It is the reason why we have a government to do for the people that which they cannot achieve individually. And as much as Gov. Perry wants to pray for Texas or America’s salvation, the future of this country is in the hands of man, not God. Put America back to work again!