Wonky is as Wonky does...

(1) The WSJ article about the difference between SJP et al's fashion and the attire of America's top female executives can be found here.  (H/T Madame X)

(2) Here is a Mother Jones article: Foreclosure Nation: Squatters or Pioneers? which reports on a group called Take Back the Land that is breaking into abandoned foreclosed properties in Miami, changing the locks, cleaning them out, painting, connecting (in mysterious ways) utilities, and moving homeless families in. (H/T Boston Gal)

Rameau says Take Back's campaign has two objectives: "One is to actually house people. The other is to bring attention to the contradictions in housing policy. The problem is that doing one precludes the other." Drawing too much attention to Take Back's efforts, he explains, would also get the attention of law enforcement. So Rameau's organization has placed only two homeless families in foreclosed homes since the campaign began in October; the first was Cassandra and Jason, a couple in their late 20s, and their two small children. They'd been living in a van before Rameau moved them into a one-story stucco home in Liberty City. When I visited them in February, Cassandra, who works as a street vendor selling jewelry and incense, ushered me into the living room, furnished with two chairs, a moving trunk, and a small television. Bedsheets covered the windows, and the walls had just been painted saffron.

As far as the neighbors are concerned, the current tenants—squatters though they are—are a vast improvement over the crack den the vacant house had become. One neighbor even loaned the family electricity via an extension cord until a mysterious man sympathetic to Take Back's cause turned on power at the house. "I didn't ask any questions," Cassandra says. The new living situation, temporary as it might be, affords her and Jason the time to save up to rent a new apartment, she said. "This just takes the stress off."

According to the Miami-Dade County Housing Agency, squatters, if discovered, will be promptly removed from the premises and potentially prosecuted. So far, though, Take Back's foreclosure-squatting pioneers have avoided detection. Despite the dicey legality, Rameau says there are 14 families like Cassandra's on his waiting list. "We counsel them that they could be arrested if caught," he says. "But things are so desperate, they are willing to risk it."

I don't condone the activities of Take Back the Land.  Among other things, they are committing crimes of breaking and entering, theft, property damage, and probably some others that a real criminal lawyer would be able to rattle off but are beyond the scope of this corporate lawyer's knowledge.  However, I think the premise is awfully clever. 

The growing foreclosure problem is not just a problem for the people getting the boot, they are also increasingly a problem for the banks that lent the money and other homeowners in the neighborhood who are not in similarly perilous financial situations (foreclosed homes drive down real estate prices and encourages break-ins and the bad kind of squatting). 

For example, part of the reason the recent sub-prime crisis had so many financial whiz kids scratching their heads is not because they lost money - the truth is, part of the gambling mentality that is the world of finance is used to losing butt-loads of money.  The real head scratching is happening because when you take a mortgage, put it together with hundreds of other mortgages, take that big package it and chop it up into 5 differently rated securities, and then sell bits of those "tranches" to all sorts of investment banks, then who actually owns the home?  The truth is, people still don't know. 

Until the ownership can be established, these homes cannot move. 

So the government could easily take a cue from Take Back the Land and take temporary trusteeship over foreclosed homes with disputed or uncertain ownership.  They can then lend these homes to non-profit organizations like Take Back the Land, who would have an obligation to maintain the house and take the initiative to match the homes with appropriate homeless individuals and families.  For example, there could be a requirement that priority be given to families with children, where there is active job seeking, or where the family/individual can demonstrate what they really need is time to do something like save up enough for a down payment.

And though this would be more difficult to do than it looks on paper, the free housing should be temporary, probably for a maximum of 3 months, which would prevent abuses of the system. 

Such a plan should be welcome by the neighborhoods where the foreclosed homes are located.  I imagine that a home being maintained by a non-profit and being occupied by vetted individuals is far better for home values than homes that are left vacant for months, looted or vandalized, or being squatted in by opportunistic vagrants or, worse, criminals.

Of course, to make such a plan truly doable, the government would have to compensate the banks for such temporary takings.  This could be in the form of tax credits or tax deductions.  On the other hand, I'll bet that the banks would be actually getting a lot of benefits from such a program even without the government compensation.  For example, in situation where the ownership is under dispute, this kind of program would guarantee that the empty building is not being vandalized or destroyed by squatters, which would help preserve the home's value.  Furthermore, since we are clearly in a real estate down-cycle, this gives the banks an opportunity to ride out the cycle and wait for recovering prices.

Furthermore, for certain investment banks, I can't imagine why the government can't simply require that such foreclosed upon but disputed properties be turned over to the temporary trusteeship as a prerequisite for using the very cheap fed discount borrowing window that has been made available recently.  God forbid that the banks actually have to give up something to get something, rather than have the government give them cheap money because *sob* the poor i-banks really really need cheap money.

Or maybe that's just me being snarky.

So that's part of my $0.04 plan to get us out of the downward housing spiral problem in the U.S.  Any economist out there care to poke holes in this?

(3) So this week I enter phase 2 of my 10 step financial wellness program (the first being this blog and... wait... there are friggin' TEN steps??), which involves OCD recording of every penny leaving these miserly claws and into the streams of commerce.  But y'all will have to wait on baited breathe for my first installment on Friday.  I know!

Of course, this will be an embarrassment of a week, because I have had way too much time on my hands (no work!  NO WORK!!) and have been snookered into going out to lunch followed by shopping by a few maybe-not-so-well-meaning colleagues.  But the dress is too cute, to die for.

Comments

[cynematic]

Y'know, on #2 and ending homelessness as we know it...I was kinda thinking along the same lines. But in my fluffy poet-y way and not your much more detailed and elaborated mind-like-a-steel-trap way.

Wouldn't it be funny if HUD was in charge of low-income housing in McMansioned exurbs everywhere?

The follow-up thought to that: would it be possible to break off little pieces of "downtown/business sectors" and scatter them around and through suburbia? What would have to change about how business is done for that to happen?

Because for all our so-called digital/paperless/wireless age, the utopian idea of "telecommuting" doesn't seem to be happening.