Cleveland Fumbles Low-Income Housing Program
Well, whaddya know? It's not just rapacious private lenders what was increasing the toll of human misery and economic turmoil by putting people in houses they couldn't possibly afford (even in a world of endlessly rising home prices):
The city of Cleveland contributed to its foreclosure crisis by helping low-income people buy homes with mortgage payments they couldn't afford, a newspaper investigation published Sunday found.
The city provided loans of up to $20,000 through the federally funded Afford-A-Home program but did not check whether recipients could afford to stay in the homes, The (Cleveland) Plain Dealer reported Sunday. Cleveland, which has one of the nation's worst foreclosure problems, did not change its policies even as hundreds of people defaulted on their mortgages….
The newspaper's review of more than 50 Afford-A-Home files in Cleveland found that some recipients of the loan program made as little as $15,000 a year.
An analysis of property and loan records from 2000 to 2007 found that many of the hundreds of loan recipients, mainly low-income people, defaulted on their mortgages within two years of receiving the loans.
Over eight years, nearly half of the 584 homes sold by the three largest for-profit companies who participated in the program have entered foreclosure—and more than one-third of those have been sold at a sheriff's sale or are abandoned.
They largely became a lost investment for the city, and represented a loss of tax dollars of $2.3 million, the review found.
Gotta love the double-whammy. Residents get coaxed into homes they can't afford and then get to pay increased taxes to cover the city's loss of tax dollars on the back side. Which then helps fuel the downward spiral in a city that just can't seem to find bottom in terms of job and population loss.
I can't imagine this sort of sorry situation is confined only to Cleveland. But as Rep. Barney Frank and other proponents (still) of expanding home ownership to every unborn taxpayer in the country will tell you, the American Dream needs to be alive and well no matter what the costs.