Thursday, January 31, 2008

An “impact fee” for foreclosures?

Housestreet   Communities across the nation are wincing at the boom in foreclosures.  In my state of Florida, about two percent of all households encountered some form of foreclosure last year.  The problem hits hardest in low-income areas, of course, where many buyers took on high-interest, high-principal loans that they have been unable to pay back.  In some neighborhoods, there appears to a house in foreclosure on almost every block.  Vandalism and other “spillover” effects may then plague the neighborhood.  A recent study by three Fannie Mae economists in The Journal of Real Estate Finance and Economics (here’s an abstract and links) used data to create a theoretical model that shows negative spillover effects on housing prices up to 10 block away, and as high as 8.7 percent.

    While some cities are trying to recoup losses with lawsuits (Cleveland has sued banks, alleging a public nuisance – see my post for Jan. 17), a prospective, long-term approach to the problem might be to compel future lenders to pay an “impact fee” for each loan that goes into foreclosure, to compensate for losses to the community.    

  Such a fee might encourage lenders to pay closer attention to avoiding making risky loans.  It could also mean fewer loans to the low-income citizens for whom it has always been American policy to try to encourage and foster homeownership. 

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January 31, 2008 | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 29, 2008

A suburb forges ahead with its housing ban plan …

  Competition encourages localities to use land use laws to foster social goals and to push away undesirable uses … and people.  In the Dallas suburb of Farmers Branch, the city is Texaspersistent in efforts to make it both illegal and impossible for immigrants in the United States unlawfully to live in the city.  After a federal judge barred an earlier ordinance in part because it used standards different from those of federal immigration law, the city has revised its ordinance, which would require potential rental tenants to get rental licenses from the city.  The city would then try to confirm the tenant’s status;  anyone shown to be in the United States unlawfully would be barred from renting in the city.

   Which would be the surest outcome of such an ordinance:  The encouragement of Latino residents to rent in neighboring towns, a black market in the rental market, or a bottleneck in the government approval process?  All three?

January 29, 2008 | Permalink | Comments (0) | TrackBack (0)

Monday, January 28, 2008

Unchain my dog?

   If you walk around a suburban neighborhood or pass through a public park on a lovely Saturday afternoon, you recognize that Americans have become a nation of people who eschew being outside simply for the pleasure of it.  Unless we are mowing the grass or heading someplace with a latte, Americans seem to enjoy their yards or parks far less than previous generations, who were less distracted by computers, cable TV, and long drives to work or shopping. 

Dog    Accordingly, it’s no surprise that politeness in handling one’s front yard often succumbs to the lure of “technology.”  A growing number of local governments are considering regulations on the use of an electronic fence as the sole restraint on dogs.  Such fences allow Fido to run unchained in the yard, but can surprise pedestrians who don’t know that the angry dog charging towards them will stop (probably) or that the canine that they are walking on a leash might be set upon by an unrestrained house dog.

   How about a land use law that, at a minimum, requires an electronic fence owner to place clear notices of the fence, if they persist in leaving Spot unconfined?  But then again, that would require the Americans to spend some time in their yards ….   

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January 28, 2008 | Permalink | Comments (0) | TrackBack (0)