It’s no secret that foreclosures are as common as traffic jams in California right now. During the bubble, piggyback mortgages were about the only way the average person could afford a house and now those interest-free periods are up and people can’t pay the piper. I was asked to enter one of these and flat outright refused, much to my current relief. I could see the train wreck from several years’ distance. I just wish I’d had the foresight of a friend of mine who sold her house in 30 days flat in 2005 for some outlandish sum and is now living debt-free in Georgia. (no, she’s not LP)
The Legislature also knows exactly what is going on, probably because it affected their budget so they actually had to notice. (I’ve been holding off on posting about the budget because frankly I’m not sure I can keep my temper) Thus was born AB 2594.
AB 2594 is designed to allow Redevelopment Agencies to become a sort of loan company. Now if you’ve been living under a rock, redevelopment agencies are government agencies that can declare blight on neighborhoods and plan new highways, malls, or whatever in the place of the old neighborhood. They don’t have the best reputation in many places, and this alone makes me highly nervous to give them any sort of additional power, especially over distraught home owners with subprime loans.
There could be some unintended consequences with less-than-bad effects, however. First, if the agencies are all tied up with individual homeowners, they won’t have the money to go after the “blight” of whole neighborhoods to put in the new super revenue mall or whatever. This actually could be good news for more modest parts of town, and could conceivably help the housing market if those places aren’t just going under the wrecking ball. In my mind, protecting the modest parts of town is good for affordable housing. The other possibility exists if the agencies take on a whole lot of bad debt. If they end up getting saddled with a lot of properties they can’t unload, they might just go bankrupt. That might be the best protection for California, in a really weird way.
Why do I sometimes feel like the legislators outsmart themselves?