Veteran Financial Services Advisor States It's Time to Hold Government Accountable in Home Foreclosu

From: Dennis Tubbergen
Published: Fri May 29 2009

Homeowners are not the only victims of foreclosure in this global recession. According to an article in USA Today's most recent weekend edition, the federal government is taking a hit as well. In the article "Feds Face Big Losses in Home Market", it is noted the federal government - which means we, the taxpayers - owns in excess of 50,000 homes and is having difficulty selling them.

Tubbergen discusses the significance of this in his financial services blog, Government-owned houses create their own set of challenges in a time when the government is already spending billions of dollars to rescue banks swamped by foreclosures, according to Tubbergen.

The Department of Housing and Urban Development has acquired at least 110,000 foreclosed homes since 2007, according to the same USA Today article cited above, and has spent about $12.2 billion to reimburse lenders after the homeowners defaulted on government-backed loans. HUD has recouped only about $5.5 billion by reselling homes to date and currently has about 38,000 homes for sale. Tubbergen goes on to explain that most foreclosed properties end up in government hands when borrowers default on government-backed mortgages. In some cases the government forecloses on loans that it wrote or took over from private lenders.

In addition to the 38,000 homes currently owned by HUD, the Department of Veterans Affairs owns nearly 9,000 homes, the FDIC has about 3,200 houses, and the Department of Agriculture owns about 1,000 houses. While these numbers are quite large, they are only a small portion of the numerous homes being seized by lenders. During 2007 and 2008 about 1.2 million homes in the United States were foreclosed on, according to RealtyTrac.

The government pays a heavy price for each home that it is unable to unload. Each day a house remains on the market, it must be kept secure and maintained. In Tubbergen's opinion, the most distressing piece of the article is the following sentence: "The exact scale of the government’s increased home ownership isn’t clear, in part because Washington hasn’t precisely tracked the homes."

He feels the current situation shows that the government has cast aside principles of accountability. "Though the Washington politicians decided to guarantee loans by at least four different government agencies, they are not even tracking the ‘problem loans.’ Any private institution doing the same thing with government money could and most might argue should be called before Congress to testify and be held accountable," Tubbergen writes.

Regrettably, Tubbergen states, politicians exempt themselves and government from rules governing behavior and ethics. According to Tubbergen, the time has come for this game to stop.

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