Bungling & Boxers
Becky Fenger | June 3, 2009
As Ronald Reagan would say: "There you go again."
After loaning money to poor people who couldn't afford homes, thereby collapsing the housing market, the federal government has come up with something new. It is going to hand out cash to first-time homebuyers (who may or may not be able to afford homes) so they can make a down payment on a house! You read it right. Taxpayers are about to underwrite another housing disaster by giving people cash for a home they cannot afford.
The Housing and Urban Development announced last Friday that first-time homebuyers are being offered $8,000 cash up front to secure a mortgage. An $8,000 tax credit already existed, but now the government is monetizing it in order to give folks cold cash to nail the mortgage. Filing those tax forms for credit after the purchase was too icky and cumbersome, you see. The only requirement by the Federal Housing Administration is that purchasers come up with 3.5 percent of the price of the house, government gift included. That means that banks are going to trust a cash strapped buyer to pay back 96 percent of the cost of a house when he has only 3 percent or so skin in the game? Is Uncle Sam out of his rabbit arse mind?
Barratt American Homes CEO Michael Pattinson explained the plan, and raved about how well the plan has worked in California where they have a $10,000 down payment tax credit. "It has boosted home sales," he brags. Duh. Of course it has. Two-thirds of a pot of $100 million has already been tapped to put people where they can't afford to stay. Uncle Sam shouldn't be taking financial tips from California, a state in the dumpster.
In the old days, saving for a mortgage built character. It took work and scrimping to come up with a 15-20 percent down payment. Ahh, but the accomplishment gave meaning to the term "Home, Sweet Home."
The same repeat mistakes are being made in the auto industry. After the feds gave billions of our tax money to "save" Detroit, the industry turns around and, you guessed it, is offering cars with no money down and giving potential customers cash to drive them off the lot! If you don't embarrass easily, pick a color and drive a free new car around to your heart's content. It will be months and months before you would ever have to relinquish the keys, and by then the shine will have gone off the ride anyway.
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While reading "The Morning Shot: Espresso Pundit for Professionals," I smiled when I read that Neil Giuliano, former Republican four-term mayor of Tempe, is going to re-register as a Democrat and run for governor. Yes, I have had my run-ins with him while I fought against light rail transit. That was with the help of former Councilman and current Mayor Hugh Hallman, who was against light rail before he was for it (running for mayor will do that to a person).
I do so wish that the reporter from the Scottsdale Tribune had not destroyed the photo he downloaded from the Internet of Mayor Giuliano in his underwear, trolling for gays to hook up with him when he arrived in Europe on a political junket. When the news hit the press (although buried), the beefcake/cheesecake picture was quickly removed. Terry Goddard, who also is challenging Gov. Jan Brewer, would have gotten a kick out of it. Espresso pundit Greg Patterson wrote it was the Bidwell family who suggested that Giuliano join the race.
Now for my juicy tidbit. A number of years ago, Mayor Giuliano divulged in a public forum in Phoenix that he would really like to be Spiderman because of the tight, tight suit. As SNL's Church Lady would say, "Isn't that special!"