NEIGHBORHOOD STABILIZATION ACT OF 2008
The Neighborhood Stabilization Act has allowed HUD to hand over $7.5 Billion in Grants and $7.5 Billion in no-interest loans to States for the purposes of purchasing rehabilitating – selling and renting properties that are abandoned, vacant and foreclosed.
This piece of legislation allocates funds based on the percentage of foreclosures in a State during the last four calendar quarters and the number of sub-prime loans that have gone delinquent in a state for more that 90 days. The City of Las Vegas is a prime target for this plan since we have more delinquent and abandoned homes in out City that are sitting in the hot sun drying up than just about anybody else in this country.
The State of Nevada must submit a financial plan to HUD on how it is going to grab all the REO’S Foreclosed and Abandoned houses in Las Vegas. The properties the city purchases under the act will be sold to families with income below 140% of the local median income. Housing purchased for rental will be made available to families whose incomes are less than or equal to the local median income. What we have here is Public Housing for poor people. When the properties regain their equity sometime in the distant future the federal government is allowed to grab 50% of any appreciation that a property owner gains from resale. The Government is now the poor man’s partner.
HOW DOES THIS IMPACT NEIGHBORHOODS?
Areas in Clark County, like most Counties, have variations in demographics and stats. There are neighborhoods that have a higher amount of income per-household, or a half a child more per family, and like everywhere else some neighborhoods just look prettier than others. In the overall the majority of Las Vegas neighborhoods fall into the category of Blue and White Collar Middle Class
Now there has been a breakdown in several Las Vegas communities resulting from the housing crisis which left scores of vacant and foreclosed homes in its wake. Foreclosures have caused property values to plummet.
People who have chosen to stay in their homes are seeing the properties in their neighborhoods losing equity at a rapid pace as foreclosures continue to remain the current fad. Because no one is living in the abandoned properties taxes are not being paid and the local tax base is eroding. We can barely keep our schools open and the Governor would like to have us eating out of garbage cans while he bangs around cocktail waitresses in parking garages. Gibbons would be more than happy to let us live life without basic necessities like plumbing and electric if he could get away with it.
The Center for Responsible Lending says approximately 40.6 million homes nationally will experience devaluation because of sub- prime foreclosures and that homeowners living near foreclosed properties will lose on average $5,000 on the value of their homes. In Las Vegas it’s more like a couple of hundred thousand in lost equity.
The days when you could get a good deal on a bank-owned home have fallen to the waste side in Vegas. The City of Las Vegas has first dibs on REO’S and foreclosed properties now because of The Neighborhood Stabilization Act. The City will either sell these homes off cheaply to the underprivileged below market value or rent them out Section 8 style where the renter only makes a token payment and the City picks up the rest of the tab. Not such a bad business plan when you have billions of dollars to float. Let the renters stay there for awhile until the equity comes back – when the equity comes back tell the renter they have to go and sell the property on the open market back to the consumer. Again, the underprivileged buyers have to share 50% of their equity with the City when they sell their homes – so the house wins no matter what. Well, hey this is Vegas and the House always wins. A few years down the road a person may wind up buying back the same property they lost to foreclosure at a price they can at last afford. the House wins again.
Regular homebuyers should be picking up these REO’S not the City. People who are upside down in equity should be getting help from the government and not foreclosed upon if they can afford to make a monthly mortgage payment that reflects market value.
In the name of public welfare the Government is creating a false economy that will collapse just like the last one, and in the end they will scrape up all the cream off the table once again and sell it back to us.
POWER TO THE PEOPLE.
