I read an interesting article in the Daily News, Friday July 25, 2008. The article is titled "Lancaster coming to the Rescue". This was on the front page right under another article titled "Foreclosures up 230%". Headlines like these do sell newspapers.  Lancaster is part of the Antelope Valley in Los Angeles County.  The Antelope Valley has had 3518 foreclosures through June 2008.  Obviously this area has a housing epidemic.  The homes that end up sitting vacant are attracting vandals and squatters. This is ruining the quality of life for many families that still live here.  The city of Lancaster is introducing the following to combat this epidemic.  Makes me think that their elected officials may know something about investing at the bottom or that they are trying to get their hands on some of the Federal money from a bill that is setting aside $4 billion to cities across the country to buy and fix foreclosed homes.

The city has started to buy some of these vacant foreclosures.  They now have title to 6 homes and have approved the rehab of 3. Their idea is to make these homes available to low income families. They plan to sell these homes at cost plus the cost to rehabilitate the properties.  The buyers will have to attend a financial class and the city may assist with down payment assistance.  In theory this looks like a smart solution after all it is well intentioned. 

The pros are that the homes are going to be rehabilitated with the environment in mind.  These homes will be more environmentally friendly.  Jobs will be created with the rehabilitation.  Homes will not be left vacant and so neighborhoods will not see an increase in crime.  Neighborhoods are preserved, sales tax revenue increases, and jobs are created.

Now let us look at the cons. Our government always talks about spending money as if it is there's.  We have to keep in mind that this money is taxpayer money and ultimately is to be used to protect us.  There's many services that I feel should be provided by private companies but that is a different issue.  From what I have seen areas that are used for low income housing do not offer much in regards to quality of life.  Neighbors would probably like to see these homes sell for a little more than just the cost of the home plus rehab.  Why shouldn't the government try to profit a little so that the program pays for itself.  Down payment assistance means that the taxpayer is lending money at a very low rate or sometimes interest free.  That money doesn't get back into the general fund until that home is refinanced and/or sold.  More than likely with such a low payment the buyer will rent out that house before buying or refinancing.  I know that the rules of these programs don't allow this but it still happens.  Another department is set up to oversee this new program and does the cost of that get included in the cost of the home?

I'm not at all saying that this program will not work.  After all they have been doing it in Providence, RI and so it would be interesting to see if the program their is self sufficient.  My point is that our government introduces these bail out programs but we need to do a better job at looking over the financial analysis.  If we can get these programs to be self sufficient and allow the government to make a little profit to achieve this then I don't see where the taxpayer loses.  After all we are a society that likes to spend and so if we had a little more money in our pocket I'm sure our economy would be better off.

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