Wednesday, January 23, 2008

Questions for Commissioners on their mortgage bail-out plan

The three Lucas County Commissioners voted unanimously yesterday to fund mortgage bailouts for residents facing foreclosure. (my post, and The Blade article on the announcement)

Here are some questions I think should have been asked prior to them making such a decision - though I doubt they even thought about most of these. Primarily, they've got a lot of TANF money ($400,000 by news accounts) that they need to spend by the end of June or it goes back to the state and federal governments. So I'm sure this 'program' makes perfect sense to them.

1) How many foreclosures are there in Lucas County and how does this number compare to the past 30 years, especially to years when there were similar difficult economic times and downturns in the housing markets?

It's one thing to say we have some of the highest foreclosure rates in the country - it's another to look at the historical foreclosure rates within the county. Nationally, the foreclosure rates in the 1980s were higher than now - and yet, we somehow managed to survive without such programs. Why is that?

2) How many of the foreclosures in the county are a result of a one-time event (like loss of a job, unexpected medical bills, or even divorce - the reason for a large number of foreclosures) versus a personal decision to take a loan with an adjustable rate mortgage or to purchase a more expensive house than could actually be afforded?

3) How many of the $1,000 vouchers did the county give out to help people make mortgage payments? Basically, how many tax dollars have already been spent on what the Commissioners said was a failed attempt at addressing the problem? Are the recipients of the $1,000 vouchers going to be eligible to get another handout - this time up to $5,000? And, in keeping with the standard illogical actions of government - if the $1,000 didn't accomplish the goal, shouldn't more money be the solution?

4) What evidence exists to prove that handouts to these individuals will "stem the tide of rising foreclosure numbers" as Commissioner Tina Skeldon Wozniak claims?

5) How will this program avoid just prolonging the problem? Will there be a financial analysis of the individual's ability to meet their obligations PRIOR to giving them the handout? If an individual cannot meet their current mortgage obligations, will anyone actually recommend that they sell the home they cannot afford and move into housing that they can?

6) If an individual does not have the earnings or assets to continue paying their current mortgage costs, how will a one-time cash gift help them in the long-term? What long-term solutions will they be required to take? Should they have to take a second job - like so many already do - so that they can meet their financial obligations?

7) Will recipients be required to eliminate unnecessary spending PRIOR to being eligible for this handout? Or will individuals be allowed to continue to spend money on luxuries while getting taxpayer money to cover their necessities?

8) If credit counseling and other services are mandated as part of the problem, will individuals have to repay the $5,000 if they don't complete the courses? Or will they just be allowed to 'take the money and run'? If the money is to be repaid, how will it be collected?

9) How does this plan help all those who are making sacrifices in order to meet their mortgage obligations? How does this bailout encourage responsible citizens to continue to be responsible? Doesn't government spending - at all levels and for all things - drive up the costs for everyone, including those who are struggling, but are still able to pay their bills ... pushing those who are on the brink into the situation this program is trying to avoid?

Here's the problem: if the Commissioners were really interested in a long-term solution to the high costs of home ownership, they never would have voted to put increased - and new - tax levies on the ballot - as they have done every time they were asked.

If they were really interested in 'helping' people afford their homes, they wouldn't have spent 8% more in 2007 than they did in 2006 - or plan for another 2% increase in county spending in 2008. They'd actually reduce the cost of county government so they could reduce the amount of taxes (property and sales) it costs to pay for it.

If they were really interested in solving the problem, they'd work on creating a business-friendly environment so that companies would be profitable here, and would expand and grow, providing good-paying jobs for county residents.

However, all those things require hard work and making difficult decisions - including telling people 'no' when they ask for funds. And it's so much easier to just give out money to a few eligible families, get a bunch of headlines and then campaign on how you 'helped' people in need.


Tim Higgins said...


I would agree with everything that you said, but would like to take a different approach to the question, and look at something that I have not heard brought up in this discussion.

The federal government is already providing significant financial support to those who purchase homes. It is a deduction to the amount of the income tax paid based on the interest that they pay on their mortgage. Depending on the size of that mortgage and the interest rate, this can be a rather sizable addition to the amount of their net income.

As one who is currently a renter in Toledo (unwilling or unable to make a commitment to the city as of yet), I receive no part of this. I get no part of the rent that I pay returned to me in the form of a tax deduction, nor do I build equity through the money that I pay in rent. Never the less, if I don't make the payments required of me every month, I too am subject to a process no less final than foreclosure (known as eviction).

As you pointed out in this piece, perhaps our County Commisioners would serve us better by attempting to make the county a place that fosters true economic development, which would help us to help ourselves. Perhaps a consideration to take less money from us in taxes would allow us to pay the bills that they seem so depserately to want to help us with. Perhaps doing a little more of the county's business and a little less political grandstanding would be more in order.

Maggie Thurber said...

agreed, Tim, and nicely said.

Hooda Thunkit said...


Of course, your logic, as usual, is flawless and spot on.

Is it any wonder that our "Robbing Hood" commissioners are popping up like prairie dogs, for the quick sound bite/photo op and then immediately heading back into their holes for cover?

I'd LOVE to hear their answers to the questions that you posed.

(Hammina, hammina, hammina, etc.)

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