Houston Proposed Taxpayer Funded Debt Relief for Some Home Buyers
Feb 26th, 2009 | By Rob | Category: featured
The city of Houston, Texas had a problem. They had $400,000 or so left over in their budget earmarked for efforts to rebuild the area from Hurricane Ike. Generally, extra money in the budget is a good problem to have. But given the nation’s real estate market and current economic climate, some people in the city wanted to put that money to work.
Houston Mayor Bill White proposed a plan to use the money to pay down some of the debt of prospective first time home buyers. Houston already has a program to provide down payment assistance to lower income home buyers in some neighborhoods which it would like to revitalize. However, some applicant’s credit scores fell just short of the number needed to qualify for the program. The solution to its problem of too much money in both programs: give the homebuyers’ money to pay down their debt and boost their credit score.
The plan, called the Credit Score Enhancement Program, would have given first time homebuyers who failed to qualify for Houston’s down payment assistance program because of their credit score a $3,000 grant to pay down debt. Unfortunately, the idea of taxpayer funded debt relief was too much for the citizens of Houston to stomach.
Houston’s mayor backed off the plan on Wednesday after a wave of national media attention and angry taxpayer reaction at the thought of the city giving homebuyers a bailout on their credit card debt. Apparently, they don’t have a problem with giving someone up to $37,500 as a downpayment for a home in a problem neighborhood. But propose a plan that offers someone $3K of city money to pay off their credit card debt in today’s environment and you guarantee your mail is flooded with angry letters.
Apparently, the mayor of Houston isn’t as powerful as the Presidents of the United States, who can garner billion dollar bailout packages for unpopular constituents above the angry cries of those who haven’t yet been crushed by America’s economic meltdown. Even the defense of the Credit Score Enhancement Program by its supporters as intended to help only those with student loans and medical bills will likely fall on deaf ears.
Why don’t I have a problem with government funded credit card debt relief?
For one thing, I don’t care about how we got into our current economic position. We could find fault in many parties for the recession. The government, the banks, the real estate speculators, the debtors, the businesses, the workers … I expect that very few would emerge from an indepth examination without any fault. Playing the blame game won’t get our economy back on track.
For another, I reject the general assumption that those with credit card debt are completely at fault for their position. Sure, there are probably some in debt who were reckless and would not deserve the grant. But for others, they were probably hit by an ill timed unemployment, a pile of medical bills, or an expensive divorce. Societal pressure to spend from peer pressure and effective advertising might be to blame as well. And the optimism inspired by the American spirit could be to blame for the risks taken on credit card debt.
My belief is that the same population that doomed the extension of the Houston homebuyer assistance program to those with marginal credit would be outraged about the government’s inability to help them if they fell on hard times. Unemployment doesn’t pay enough. Health insurance doesn’t cover enough. Employer’s don’t take care of their employees like they used to care for them. For a few, they probably made their own fortunes. Maybe more than a few. But for many, it was probably just dumb luck that they haven’t been destroyed by the problems in today’s economy.
So this is me, standing up in favor of government manipulation of the bankrupt bank run credit score system with a bit of taxpayer money for the benefit of those who have had a bit of bad luck or need a helping hand rather than directly prop up the financial system and in opposition to those who think it can’t happen to them.
Houston, we have a problem. Adopt the Credit Score Enhancement Program.
