The other day, I responded to a comment on Twitter from a knowledgeable mortgage financing friend regarding the current housing situation vis a vis foreclosures. His view is that the "market should find its own level" ; that the Federal Government should not interfere with modification programs, the EHLP program etc.
After some thought, I must agree with him. If the pace of foreclosures returns to normal (once the robo-whatever is done and docs are corrected) and evictions follow promptly, there will be plenty of Housing For The Homeless. There will be no need to build new shelters. Mortgagees can just allow cities to house "The Homeless" in these abandoned/emptied OREO properties. The cities would pay but only by not taxing the mortgagee/foreclosing entity. If the mortgagee does not incur this liability by recording a deed, then more properties will be formally owned by the entity which won the foreclosure sale bid.
Now, one might ask,"Why should the homeless get to live in someone else's house when the someone else just got evicted and became HOMELESS?" Answer: "Well, that's the market finding its level!!!". Further, the new homeless family can move into another "victim's" house as he/they get thrown out! See, that way no one can complain - except "The Investors".
This is the shadowy group (Goldman, Lehman, Bear Stearns, Countrywide, JPMorgan et al) which created the securitizations of the mortgages, and sold and/or bought (and hedged) the resulting "bonds". They are the folks who took a mortgage, put it together with 3000 others, released all of the originating banks/mortgage companies from all liability, and sold pieces of the pool of mortgages as "Mortgage-Backed Security" shares/participations.
A solution to the matter of getting the investors paid during the OREO stage, would be to have the "Newly Homeless" receive a minimum wage pay (because they are out of work which is why they lost the house to start with) to remove all of the black mold that develops in uninhabited housing. To be fair, some of it isn't Black Mold of the bad kind but just regular garden variety MOLD.
So we have the solution:
1. Increase the pace of foreclosures to create Housing for the Homeless
2. Hire the homeless, now in a home, to remove mold
3. This helps the national unemployment problem so there should be some federal money for job creation, which can be paid to the investors as rent from the Homeless
4. The homeless move in, shopping carts, kids and all, and the streets look better, so new companies will move into the formerly empty urban areas because the former homeless have homes and a paycheck
5. The suits against the foreclosing mortgagees should slow, because, the family which just got evicted can move into another family's newly vacant home AND get paid.
The market will find its level. Hopefully it will be above the water table.
Author's Copyright by Richard I. Isacoff, Esq, July, 2011