Federal Mortgage Subsidies

I sent the following letter to the New York times in responce to an article about the mortgage bailout plan:

"Chairman Bernanke maybe correct in proposing a bailout for the the real estate market (NYT 12/5/08). But in this case as with any of the other governmental interventions, the rules for such a bailout must also address some of the problems that resulted in our current economic crisis. Regulations for such a loan program must address issues such as home affordability, the nation's energy policies and climate change.

"In order to qualify for such subsidized loans, home buyers should be able to show that they can afford such a mortgage as well as the other costs associated with home ownership and all other living expenses. A contingency fund must be included in such a budget. The individual beneficiaries and the nations economy will be primed for a new crisis without such a mortgage qualification process.

"Restrictions are also needed upon the types of properties and homes purchased with these subsidized mortgages. Properties in flood plains, wildfire areas and those subject to severe storms or earthquakes should not qualify for such programs or require special building techniques and materials. The sizes of these homes must also be limited. Subsidized loan programs must help reverse the recent tendency to build McMansions. The additional material and energy costs needed to build these large homes are a precursor for their larger and ongoing energy and maintenance budgets. Restrictions like these will make such homes more affordable to the current home buyers, future owners and our society.

"Such rules and restrictions must be carefully crafted in order to produce the desired results and reduce some of the inevitable red tape. A failure to deal with these issues will most certainly promote another housing crisis and a housing stock the reduces our ability to deal with the energy crisis, climate change and other disasters."