Repo Homes in All States

Posted on April 25, 2008
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An aid package of $15 billion has been sanctioned by The House Financial Services Committee. But in the wings there was bitter wrangling centering around Chairperson Barney Frank (D-Mass) with states competing with each other for a bigger slice of the pie. Midwest staked a larger claim than that of California. House Speaker Nancy Pelosi (D-California) had to intervene – although Frank denied this. He added – “she was invoked but she was not involved”.

The incident points to the storm raised by the sub-prime foreclosure crisis that has slapped the economies of some booming or otherwise struggling states. All are in the same stew trying to snatch the lifeline.

Policy makers in Ohio belonging to both parties raised objections about the distribution efforts being done through legislation. Initially the plan aimed to take into consideration the average price of houses in the state as well as the number of repo homes in the region. According to this yardstick the lion’s share of the pie – nearly one third of the $15 billion would go to California. But this would be unjust on other states badly hit by foreclosures.

In March California reported the highest number of foreclosures. It has kept its top rank for 15 consecutive months. Ohio runs close on its heels with the Rust Belt states following. The economic climate has been bleak in the latter regions for quite some time. But in California, Nevada and Florida it was just the opposite with a housing boom during the past few years. So the reasons for foreclosures are different in two different regions.

There is a strong plea for revising the conditions for getting a slice of the help pie. The distribution formula seems to be erroneous. The number of foreclosures should not be the sole basis for disbursing funds. It is help to the house owners that should be given priority. It is not a matter of helping those areas where the fall is because of falsely inflated appraisal of the house. Democrat Charlie Wilson of Ohio also complained that the funding was not fair. Ohio’s average price of houses is far lower in comparison to other states which are not so badly affected.

The arguments are thrown back and forth with all being reminded that Pelosi is another person from California. At the crux of the problem is that there are not enough funds to go around.

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