No Place Like Home

As the housing market continues to slog along, many American's are facing foreclosure, unable to sell their homes, and recent reports have shown banks are not willing to help people lower their monthly payments. On top of that, the Washington Post completed a yearlong investigation into the Department of Housing and Urban Development (HUD) showing many of the funds allocated have not been used.

According to the Post, $400 million dollars has been allocated for 700 projects across the country, but many of those projects have not been constructed because managers could not get funding from banks, land codes had been violated, or just plain old politics (Not In My Back Yard). Many of these grants were to be used to build developments for people living below the poverty line. This makes it a two edge problem; not having the money spent hurts the area it was supposed to be spent in, and it leaves people who need those homes looking for places to live.

The article described how HUD was having trouble enforcing their own rules because they did not have enough lawyers, and even while the majority of states tell HUD that the projects are not able to take off, the process is very slow because it goes through a lot of red tape. This left millions of dollars in accounts that have been sitting there for years. In the meantime, these funds could have been transferred for projects that are ready to be built, which would have created jobs and helped to keep the economy moving.

Some of this shouldn't be that big of a surprise considering the state of the overall housing market. And enforcement has always been a problem when it comes to government programs, usually because agencies are understaffed. One way to raise revenue and lower the debt would be to hire more IRS agents. But if there is a lack of communication between local, state, and federal officials, there is an easy fix: the internet.

With all the work being done to make the federal government more transparent, and releasing data from within the agencies with data.gov, why not create a program that shows all the players involved within a project what step they are at? Agencies at HUD can look for the last time someone updated the project within the program, and if it has been a while they can get in touch with local authorities and ask for an update. There are plenty of programmers and companies that figure out how best to create these collaborations which, if done right, can make sure everyone is on the same page and build the projects that will benefit the families that need a roof over their heads.

The recent recent floods in the south have destroyed a number of houses, and even though the Post points out that some non-profits do not have the expertise to properly build them, there are plenty of organizations that do. In fact, many of them can be found working in New Orleans as I'm writing and you're reading this post. Many of the houses being built are green houses where so family that lives in the house will save money on their heating and electric bills.

A major hurdle in this effort will be to get the banks to loan money to landlords and managers of these projects. But in a recent interview with housingfinance.com, Bob Simpson, Head of Fannie Mae's Affordable Housing Unit said "As we look at our production on a month-to-month basis, we're definitely very busy, and that's probably the best sign that it's working. We now have a dedicated affordable credit team, a dedicated production team, and a pricing team that just prices affordable transactions." Translation: Since we were bailed out by the Federal Government, it gave us the ability to get rid of the loans we never should have made, and now we can start to create more loans that won't bust."

Last week, the major banks reported the amount of people who owed money on their mortgage was the lowest in 15 years, which could give them the confidence to start lending more money. Dorothy was right, there is no place like home, and building them can help America's economy and families.