Exploring the 'fairness' of housing rescue

The discussions with industry officials in the hallways at the recent National Association of Home Builders gathering in Las Vegas echoed the conversations at the National Association of Realtors' annual convention in Orlando. They now have become a common consumer topic: Where does "fair" fit in the various economic stimulus plans?

Should banks receive money before the long line of consumers hurting from house payments? Should consumers who knowingly borrowed too much be bailed out at all? How do you determine clear greed from genuine desperation?

What group should really come first? Sheila Crowley believes we should always start at the bottom of the housing ladder and then work our way up. She was not enthused that the first proposed amendment to the American Recovery and Reinvestment Act of 2009 would give every homebuyer this year, no matter his or her income, a $15,000 tax credit.

"If the country can afford to subsidize over a million families no matter what their income to buy new houses, surely we can afford to prevent a huge increase in the number of people who lose their homes altogether and become homeless," Crowley said.

As the president of the National Low Income Housing Coalition (NLIHC), Crowley constantly is seeking creative ways to fund basic shelter. Extras simply don't compute, especially when more low-income people are heading to default and foreclosure due to upwardly adjusting mortgages and an increasingly dwindling job market.

While the final language to the American Recovery and Reinvestment Act of 2009 includes more help for the bottom rung of the housing ladder, the NLIHC was stunned by the lack of a household-income ceiling to the amendment. The amendment passed by voice vote without a single senator raising an objection. The cost of the amendment is approximately $18.5 billion and did not include an "offset" -- so the cost is added to the total cost of the bill.

Crowley estimates 13 million households have severe housing-related problems -- and that doesn't count the roughly 1 million homeless individuals for whom there is no housing. "Severe" means more than 50 percent of their monthly income heads to housing expenses.

"If you redirected the mortgage interest deduction from homes over $300,000, you could end homelessness tomorrow," Crowley said. "How much of a home do people really need and to what extent should the government go to subsidize that home?

"But people believe the mortgage interest deduction is their birthright. It's an untouchable -- just like Social Security. Suggest getting rid of the mortgage interest deduction and you'd better leave the room." ...CONTINUED

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