Connolly and Fairfax Supervisors Get It Right - WAPO Doesn't Get It

Just when you think it’s safe to praise the Washington Post, they come up with an editorial criticizing what may be one of the most creative plans in the nation to deal with the mortgage crisis. It’s further proof of something I’ve long suspected about the Post, which is that their editorial page writers don’t read or respect their own reporters’ work. That can be the only explanation for some of the editorial positions they take which appear to contradict their own front page articles. That appears to be the case here, where Amy Gardner wrote an excellent story on Gerry Connolly’s plan to buy outright some abandoned property to resell to first time homebuyers, especially county employees, and to provide subsidized loans for other foreclosed homes.

And what is the main reason for the Washington Post editorial board’s objection?

They are not sure there’s a crisis yet.

A BOLD PLAN to turn foreclosed homes into affordable housing in Fairfax County is a good idea that is based on fuzzy math. Foreclosures are on the rise in Fairfax, as they are throughout the country, but it's unclear whether the problem is severe enough to require government intervention. Some Fairfax officials say that 3,500 homes in the county were foreclosed on in the first three months of 2008; others say that the number is closer to 2,000. There are no data on how long properties in Fairfax that are foreclosed on remain on the market, and it may be that the private sector is taking care of the problem.

It frankly sounds like they are getting ready to drink the same free market Kool Aid that Republican ideologues Michael Frey and Pat Herrity have been known to quaff.

Mortgage foreclosures jumped from 74 in January of 2007 to 1400 in January of 2008 according to a CNN report yesterday (great video at that link). And the Washington Post is questioning whether there’s a problem here?

Further, the Post’s caution, suggesting that county government wait until the crisis of abandoned homes grows even worse, could speed the deterioration of stable middle class neighborhoods, drive property values down even further below market rates, and exacerbate crime and gang problems. Sometimes, being proactive as well as creative can head off major problems. And sometimes waiting on ideology can make small problems gargantuan.

To be sure, some of the Post’s suggestions for implementing this program are correct and are well taken.

The county's housing department will administer these programs, but supervisors will decide which homes to buy. It is unclear how they plan to make this decision. Supervisors said that they would target areas at risk of becoming foreclosure clusters, including neighborhoods in Herndon, Centreville, Vienna and Falls Church. But without precise data on foreclosures, the decision will largely be subjective. This ambiguity could allow politics to enter the equation, particularly for supervisors running for office. It is also unclear whether the purchase of 10 homes would put a dent in the foreclosure rate or arrest falling property values. The housing department will go over many of these details with supervisors in a July 21 meeting.

Yes, the county government should proceed in a sensible and pragmatic manner. And that precaution could have been pointed out in a more favorable editorial that supported the idea and made the same point that even good ideas need to be implemented carefully and wisely. But the whole tone of the editorial was negative at its beginning, seeking to question, not simply the implementation but the very necessity of this program to start with, and that’s where the Post editors showed their usual myopia about any government solution. It’s worth noting, however, that the same free market, anti-government intervention Washington Post did not object to an expensive government bailout for the mortgage industry, which created this mess.

They rightly argued that even though many of the companies did not deserve the help, it would be an economic disaster to simply do nothing. They were right then. And they are wrong now because it would also be an economic disaster, for a different group of people, to simply let abandoned homes destroy the property values of hardworking people who, through no fault of their own, happen to have had the misfortune of living next door to other people who defaulted on their mortgages and had to vacate those homes.

On a separate note, it should be pointed out that the Washington Post editorial writers also have a problem with their own fuzzy numbers. They referred to Gerry Connolly as the candidate from the 10th CD, rather than the 11th. Sure it could be just a typo, as Post defenders will rush to comment. But the Washington Post pays lots of money for proofreaders, copy editors and fact checkers. So somebody should have picked that one up. Were they asleep at the wheel or do they just not know Virginia as much as they think they do at the National desk?

Gerry Connolly Tackles Mortgage Crisis in Fairfax

I know, I know, everybody in the Netroots is deeply suspicious of Washington Post reporter, Amy Gardner. And we’ve all had our differences with the pro business Post and with Gerry Connolly. That said, Gardner reports that Connolly proposed a truly innovative plan to ease the mortgage foreclosure problem in Fairfax County, one that adds to the county’s stock of affordable housing and provides homes to county employees – a concept known as workforce housing. Gerry Connolly, Chairman of the Fairfax County Board of Supervisors and candidate for the 11th Congressional District, deserves to be commended as a trailblazer for coming up with this proposal and marshalling it through the Board of Supervisors. And the BOS also deserves kudos for passing the legislation and making it a reality.

Here’s what the WaPo said about it:

Fairfax County approved a landmark housing program yesterday to buy foreclosed properties for middle-income families, becoming one of the first communities in the country to tackle the nation's growing mortgage crisis while also addressing the region's increasing demand for affordable housing

According to Gardner’s report, the county will buy outright about ten percent of the homes in foreclosure. For the rest, Fairfax will help first time homebuyers purchase houses through subsidized loans, taking advantage of the fact that thousands of homes have fallen below market value, in what the Washington Post has termed “a unique moment.” Here’s the Post quoting Connolly:

"Fairfax, like the rest of the country, is facing a foreclosure crisis that's unprecedented," said county Board of Supervisors Chairman Gerald E. Connolly (D), who proposed the idea. "The county has to use its resources and influence to try to stem the tide."

For more details on the dollar amounts and the nuts and bolts of how this plan will work, read the entire article.

Meanwhile, some critics – and every good idea has critics, who often make valid points – charge that instead of putting money into selling these homes to others, the county ought to be doing more to aid the original owners to avoid foreclosure in the first place. As I said, those critics have a point. And Fairfax will, indeed, include financial counseling to homeowners in distress to help them avoid falling into foreclosure if possible.

For some, however, the aid will come too late. They’ve already lost their homes, which stand abandoned, creating a host of problems for the neighborhoods where they are located. I’ll get to those problems in a minute. But I have to add that for many, their financial problems are beyond rescue.

Too many victims took home loans with unrealistic adjustable rates that ballooned. They started with below market “teaser” rates designed to attract homebuyers who had no hope of being able to afford their homes. It’s why the entire industry needs better regulation. Adding to the problem, those who might be able to hang on by refinancing those homes to obtain a more affordable and realistic fixed rate mortgage are locked out of that solution because sinking housing prices mean their homes are no longer worth what they paid for them. Once the housing bubble burst, so did their dreams of owning their own home. You might call it the bursting of the American Dream for many.

Unfortunately, that also leaves an American nightmare for other property owners living in neighborhoods where foreclosed homes are abandoned. Here are some of the problems I told you earlier that I'd discuss.

Anybody who has lived in an urban or inner suburban area can tell you that abandoned buildings of any kind attract illegal squatters. Those could be gang members, drug dealers, addicts in search of crack houses or heroine shooting galleries. And those who take up illicit residence in these places drive up the crime rate as well as driving down the property values.

Ironically, Republicans on the Fairfax Board of Supervisors, such as Pat Herrity and Michael Frey, voted against this housing proposal because they believe the “market” will take care of the problem by attracting private buyers to the foreclosed properties. In fact, Herrity termed it “a problem in search of a solution.”

That’s only true if you believe the government has no role in protecting ordinary citizens and their investments (never mind that government can always find a way to help large investment banks and mortgage companies with expensive, tax funded bailouts). Meanwhile, we’ve seen how well the market has protected those hard working, middle class people by bursting a housing bubble, driving property values down, and leaving their neighborhoods vulnerable to squatters in abandoned buildings, and the accompanying rise in crime rates. Seems like that market could use a little assistance, both in better regulation at the federal level and some innovative programs like this one to help neighborhoods as well as new homebuyers at the local level.

Besides all that, real life is composed of more than just “market-based” values. There is something to be said for using public private partnerships to aid communities in other ways. And that’s another commendable feature of this program.

It would give fire fighters, police, nurses, teachers, and other county employees an opportunity to purchase homes in the communities in which they serve. Providing affordable housing to professionals in the community gives them an even greater stake in that community's well being. It makes those they serve their neighbors, friends, and family members. And in a real national emergency, who wouldn’t want their first responders living in their own communities, better able to truly respond quickly by getting to their duty stations rapidly?

There are manifold benefits to this proposal.

"It's a good idea," said John McClain, a senior fellow at George Mason University's Center for Regional Analysis. "It's been talked about nationally, and I hope that it will make a dent."

Indeed, Connolly shares that hope.

Connolly said he hopes the program can be a model for the nation -- and also a beginning, capable of expanding if Congress approves legislation addressing the foreclosure crisis. Legislation before Congress would help more than 400,000 distressed borrowers trade mortgages with rapidly rising payments for more affordable government-backed loans if their banks forgive a portion of their debt.

"There could be an infusion of outside resources that would allow us to do more," Connolly said. "The federal bill is still winding its way through Congress. Fairfax would have a program in place to qualify, which is very much on our minds as well."

Once again, kudos to Gerry Connolly and the Board of Supervisors for providing a pragmatic and progressive solution at the local level to a growing national problem. This should put a spotlight on Fairfax County for innovative leadership.