Monday, December 15, 2008

HUD Help with Economic Crisis

President-elect Barack Obama says that the department of Housing and Urban Development will play a key role in his plan to create or save 2.5 million jobs.

From USAToday:

"'To end this economic crisis, we must end the mortgage crisis, where it began,' Obama said during his weekly address Saturday. [Housing secrectary pick Shaun] Donovan 'knows that we can put the dream of owning a home within reach for more families so long as we're making loans in the right way.'"

The incoming administration has talked about using some of the $700 billion economic bailout fund to stem foreclosures. In addition, Obama said HUD will focus on keeping homes affordable in the first place.

It will be interesting to see what exactly that means, come January.

In Congressional hearings in June, Donovan, a New York City housing official, said that "cities like us across the country cannot preserve [affordable housing] on our own."

(Closer to home, HCD head Robert Lipscomb has told me several times that they knew foreclosures were a problem in Memphis before the larger mortgage crisis, but they couldn't do anything without backing from the federal government and that it wasn't a priority of the current administration.)

I will say, Obama was on Meet the Press two weeks ago and he drew a great analogy after Tom Brokaw asked him why homeowners who were paying their mortgages but seeing their neighbors "getting bailed out" wouldn't just walk away from their mortgages.

"We don't want what you just described, a moral hazard problem where you have incentive to act irresponsibly," Obama said. "But, you know, if my neighbor's house is on fire, even if they were smoking in the bedroom or leaving the stove on, right now my main incentive is to put out that fire so that it doesn't spread to my house."

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