Housing.com News, Analysis & Opinion: Katrina Housing: Trailer Park Travails

The money quote:
"I don't think this is the most effective way of dealing with the situation," says Ronald Utt, a senior fellow at the Heritage Foundation in Washington and a former US Housing and Urban Development official. "The much more cost-effective way for the American taxpayer and socially effective way for the evacuees is to use the existing HUD voucher program."

But FEMA officials say the sheer number of people needing homes - roughly 400,000 - has made housing them extremely difficult. All options are being employed, the agency says.

Could it be because this administration, which was trying to cut Section 8 funding before the floods, simply doesn't want to admit that traditional anti-poverty programs sometimes work?

Federal Reserve Governor Susan Bies tells bankers to shape up when it comes to encouraging speculative housing investment and preventing predatory loans. Read the full text of her speech for some interesting insights:

Still, affordability products pose special risks--for instance, there is a greater likelihood that borrowers will experience negative amortization, that is, since the monthly payments do not cover current accruing interest, their mortgage balances will increase over time. Since borrowers with traditional mortgages expect the amortization of their loans will decrease their balances and build equity in their homes, we would expect lenders to clearly communicate to borrowers that this may not happen with non-traditional products.

As you have seen in recent headlines, the data show that African-American and Hispanic borrowers obtain higher-priced mortgage loans much more frequently than do whites or Asian-Americans. For example, African-American borrowers obtained higher-priced conventional home purchase loans in 2004 more than three-and-one-half times as often as white borrowers; Hispanics, more than twice as often as whites.1 Such great disparities raise legal issues of compliance with fair lending laws as well as basic ethical, social, and economic questions.

Greenspan's response? More blathering about "economic flexibility" and "impressive rates of growth." This guy can't get out of office fast enough.

"A sizable portion of properties continue to receive insurance rates that are far from actuarially sound," Sen. Richard Shelby, a Alabama Republican and Banking Committee chairman, said in a prepared statement.

"I believe the continuation of subsidized rates, particularly for properties that have suffered repetitive losses and those that are vacation homes, represents a financial drain on the flood insurance fund while encouraging families to remain living in harms way," Shelby said.

I linked to an article yesterday that discussed the areas which would be hurt the hardest in the event of a housing slump, among them being Baltimore. As it happens, my man Bubble Meter has some beautiful pictures of rehabbed and on-the-market housing in Charm City.

The pictures and the comments tell a very important story. Baltimore has cheap housing and is a major construction hub. But if the market falls, there will be less construction, meaning fewer jobs, which means markets will go down, which means economic slump. This will continue to contribute to the crime and poverty which riddles the city.

However, if people are priced out of the market in D.C., they may flock north to cities like Baltimore and brave the interminable commute to work just to get a handle on the cheaper housing. Ironically, those HUD grants I mentioned earlier could probably net you a fairly nice place in the Baltimore Metro area.

So more people will come to the city, thus requiring more jobs, and an influx of services, which will uplift the economy. This is the type of thinking that helped shape the New Urbanist movement.

I really think we're moving away from the commuter-centric, massive McMansion, gated community, isolationist style of living, and back to a city-centered, communal, cultured system. This could be the start of it, if we have the courage and the financial sense to see it through.

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A look at FEMA trailer park life. You leave this article with a curious mix of optimism and cynicism. The former, because it's great to see the evacuees finally getting more in the way of living standards, amenities, and opportunities. Cynical, because I know for a fact that we can do better still, and we're wasting money and delaying peoples' chances for a new start. The money quote: "I don't think this is the most effective way of dealing with the situation," says Ronald Utt, a senior fellow at the Heritage Foundation in Washington and a former US Housing and Urban Development official. "The much more cost-effective way for the American taxpayer and socially effective way for the evacuees is to use the existing HUD voucher program." That program would put evacuees - who are overwhelmingly city dwellers - into apartments instead of hotels and trailer parks, giving them better access to neighborhoods, public transportation, and jobs. But FEMA officials say the sheer number of people needing homes - roughly 400,000 - has made housing them extremely difficult. All options are being employed, the agency says. Tell that to the Atlanta-Journal Constitution and the Washington Post. The Post even flat-out says what needs to be said: Could it be because this administration, which was trying to cut Section 8 funding before the floods, simply doesn't want to admit that traditional anti-poverty programs sometimes work? It could indeed. Federal Reserve Governor Susan Bies tells bankers to shape up when it comes to encouraging speculative housing investment and preventing predatory loans. Read the full text of her speech for some interesting insights: Still, affordability products pose special risks--for instance, there is a greater likelihood that borrowers will experience negative amortization, that is, since the monthly payments do not cover current accruing interest, their mortgage balances will increase over time. Since borrowers with traditional mortgages expect the amortization of their loans will decrease their balances and build equity in their homes, we would expect lenders to clearly communicate to borrowers that this may not happen with non-traditional products. As you have seen in recent headlines, the data show that African-American and Hispanic borrowers obtain higher-priced mortgage loans much more frequently than do whites or Asian-Americans. For example, African-American borrowers obtained higher-priced conventional home purchase loans in 2004 more than three-and-one-half times as often as white borrowers; Hispanics, more than twice as often as whites.1 Such great disparities raise legal issues of compliance with fair lending laws as well as basic ethical, social, and economic questions. Greenspan's response? More blathering about "economic flexibility" and "impressive rates of growth." This guy can't get out of office fast enough. I mentioned the consequences of not having flood insurance earlier, and now it seems that the chickens have come home to drown. Killer quote: "A sizable portion of properties continue to receive insurance rates that are far from actuarially sound," Sen. Richard Shelby, a Alabama Republican and Banking Committee chairman, said in a prepared statement. "I believe the continuation of subsidized rates, particularly for properties that have suffered repetitive losses and those that are vacation homes, represents a financial drain on the flood insurance fund while encouraging families to remain living in harms way," Shelby said. You're all heart, Shelby. What a guy. I linked to an article yesterday that discussed the areas which would be hurt the hardest in the event of a housing slump, among them being Baltimore. As it happens, my man Bubble Meter has some beautiful pictures of rehabbed and on-the-market housing in Charm City. The pictures and the comments tell a very important story. Baltimore has cheap housing and is a major construction hub. But if the market falls, there will be less construction, meaning fewer jobs, which means markets will go down, which means economic slump. This will continue to contribute to the crime and poverty which riddles the city. However, if people are priced out of the market in D.C., they may flock north to cities like Baltimore and brave the interminable commute to work just to get a handle on the cheaper housing. Ironically, those HUD grants I mentioned earlier could probably net you a fairly nice place in the Baltimore Metro area. So more people will come to the city, thus requiring more jobs, and an influx of services, which will uplift the economy. This is the type of thinking that helped shape the New Urbanist movement. I really think we're moving away from the commuter-centric, massive McMansion, gated community, isolationist style of living, and back to a city-centered, communal, cultured system. This could be the start of it, if we have the courage and the financial sense to see it through.