Sunday, March 1, 2009

My Idea For Using The Bailout Money

Here's an idea I've come up with for using the bailout money to assist the banks in a way that makes sense.

Create a branch of the Dept. of Housing and Urban Development that will use the bailout money to lease foreclosed homes from the banks and turn them into shelters for the homeless. Homeless people are using these homes for shelters, but doing so as squatters, meaning the bank is still not generating an income from the property.

As the residents of these shelters get jobs and are able to get a home of their own, the leasing money could be used as a government backed loan towards the down payment to purchase the home they have been using as their shelter.

This helps by providing the banks with a genuine income from the properties they now own, and it gives people who have become homeless as a result of this mess a safe place to stay and an address to use in order to find employment.

4 comments:

Shellee said...

But, you're forgetting... it makes sense and government is full of non-sense right now. We have a President that has spent more in 1 month than most spend in their entire time in office.
You have a good idea, too bad the idiots are in charge.

Dawn Bushman said...

I know what you mean! Too bad we can't fire Congress and start fresh!

Jacob said...

It is a good idea, and I know that your intentions are meant to be good, but here's the thing about your idea- What do we do with those people once the bank wants to sell the house again? Throw them out again, or force them to move to a new place- potentially hundreds of miles away? And, these people living in these homes are almost guaranteed to create expenses through property damage (accidents happen). It's possible that they could ruin the house and the bank would then never be able to sell it. At that point, the bank would have lost a potentially valuable (even if not right now) asset. There are a lot of things that must be thought over before anything can be done. Also, with these homeless people, what's to stop them from performing illegal acts while hidden away in these homes? It's a (distant)possibility that we'll see drug cartels operating in government sanctioned homes or people declaring bankruptcy and then evading taxes while living in a warm place that we pay for.

Just throwing in my thoughts..

Dawn Bushman said...

Good points, Jacob.

Yes, more thought does need to go into this.

For starters, to me it should be required that the homes being rented out should be monitored by a privately owned property management company. Management companies would need to hire more people, with full time employment and benefits, to handle the additional load.

Second, these people would also be required to have visits by Social Workers to assist these people in locating jobs and getting their financial house in order. These Social Workers can be hired from private enterprises as well.

Banks wishing to sell the house must give the management company and renter a minimum of 30 days notice if the property goes into escrow to another buyer.

On the other hand, let's look at a few advantages.

1. There are banks already doing this, by renting out foreclosed properties, with the agreement that the renter keep the property maintained for the bank in exchange for low rent.

2. It keeps the property from becoming a vacant drug house.

3. Maintenance on the property keeps the property values from dropping even more than they have.

4. If the occupants could actually have a shot at owning the home they are renting, they have more incentive to keep the property looking nice.

5. The bank who owns the property is making an income off of the property instead of sitting on an asset that can quickly become a liability.