When the President came to California yesterday and announced that the state will receive $145 million to help communities hard-hit by the foreclosure crisis, I thought to myself, “$145 million? That’s pocket change.” I realized then, that with all the stimulus packages, and budgets plans, and financial talk that have been spattered about the news like a massive Pollock painting in the last few months, my perception of the actual worth of $145 million dollars had been greatly skewed. $145 million can go a long way, can’t it?
The funds, as the President said on Thursday, “will be used to purchase and rehabilitate vacant, foreclosed homes and resell them with affordable mortgages.” He goes on to add that the funds “will also provide mortgage assistance and rehabilitation loans for low-income and middle income families.” The program that generated these funds, “was created as part of the Housing and Economic Recovery Act of 2008, which permits state and local governments to purchase foreclosed homes at a discount and rehabilitate or redevelop them”, reports the Associated Press. “Additionally, funds will come from the massive stimulus package.” Who knows how much additional funding from the stimulus package will actually go towards California’s foreclosure problem, and who knows how far this money can go to do all the things that the program is intended to do.
After-all, according to the RealtyTrac research firm, there were filings for 80,775 foreclosures on California properties in February. Oooooowweeeee, that’s a fair bit of foreclosures. How much money are we getting again? Of course, that number is slightly skewed due to the foreclosure moratorium that took place starting at the end of November and ended towards the end of January. For those unaware, the moratorium basically just halted the foreclosure process for that time period in an effort to keep people in their homes during the holiday season. So during that time, the amount of foreclosure filings piled up. But now that it’s over, we’ve got a lot to deal with. It would be interesting to get a number on the average dollar amount that will be spent per foreclosure with this money and see how big of dent the $145 million can actually make.
But I don’t mean to sound like Debbie Downer. $145 million is a fair bit of money. And hopefully a nice chunk of the money that California gets from the stimulus package will help as well. And moreover, this money will certainly help rejuvenate some neighborhoods in the state, and any bit of progress that can be made to lessen the enormity of this foreclosure crisis is a damn good thing.
By Andrew Brentan
Eric Elegado Update
It’s funny that you mentioned the moratorium ending. It really didn’t seem to do much except prevent the inevitable and give people a little break over the holidays. As soon as that moratorium ended I can’t tell you how busy I was with foreclosure re-keys. For about 3 weeks straight I was doing 15-20 re-keys every day.
Right, we must appreciate the effort, the amount may not be able to save all the foreclosures in California but it will definitely be of help to most.
I think loosening up the lending standards for true investors would have a far better benefit then allowing an entity with little experience when it comes to business handle something like real estate.
Just look at the bumbling of AIG by our Congress who did not even read a bill they voted Yes on.
Who handles the work, who buys them, who sells them back? Do you really trust that the Govt. can handle this cost effectively with taxpayers money?
By the way… interesting comment from Greg concerning the next wave of foreclosures coming due to the moratorium. We have the same situation here in Las Vegas with almost double the amount of foreclosure filings for February of 2009 in comparison to February of 2008.
Just more of a clue that all of the Taxpayers money has so far… been wasted and has only delayed the correction. And now the Fed is printing money to buy long term debt so it can flood the economy resulting in the dollar being devalued… Priceless…
Buy Real estate (and gold) because inflation is coming soon… True Investors know this but their hands are tied behind their backs with all of the lending restrictions placed on them.
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Just think – it only cost the president $80,000 to fly his plane and staff to California to award the $145 million.
We just have to let the pieces fall into place and let the market dictate where the economy ends up. The value of homes has dropped but the sale of home has increased over last year.
It would be interesting to see just how much of the 145 million would be spent on each forclosure and how much it would help. I agree though, the initial response is “$145 Million is nothing!” after you get used to hearing TRILLIONS and BILLIONS in all the news. I am sure for many it will help, though not all.
Right, we must appreciate the effort, the amount may not be able to save all the foreclosures in California but it will definitely be of help to most.
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I know 145 million sounds like a lot, but in California this amount might help one neighborhood. It’s merely a drop in the bucket. Even when you add low rates, stimulus plan, lower home prices etc it helps very little. Looks more like lip service than anything to me.
$145 in California, not that big. Even though it is not at least the Pres. is trying to do his best to help some homeowners not to have their homes foreclosed.
It is easy to loose the value of 145 Million when we keep hearing Trillions and Trillions all the time in the news; however, even if it won’t help much, at least it will help some. For those few it can help it will make a world of difference.
It is a small drop in the bucket, but it will make a huge difference for the people it can help. We will see how this all turns out, and really just hope for the best results form all the stimulis the government has sent out.
I don’t know how much the $145 Million will be able to save all the foreclosures in California but I think it me be of some help. At least something is better than nothing.
Cheers,Harry,Panama property
With the amount of money stated, it takes no less that it could do more compared to the foreclosure crisis that has been going on. Still, it could at least be beneficial in alleviating the trend. But then again, how many of the people could then afford to pay those loans with the unemployment rate escalating. Hopefully, this forthcoming holiday season, everything would then turn out right.
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That’s just shy of $1,800 per foreclosure. I wonder exactly how the funds are spent and how much administrative overhead goes into managing the funds.