President Obama arriving in Phoenix, photo by Daniel Cordero
Today Obama visited my hometown in Phoenix, AZ to unveil his mortgage foreclosure plan. He couldn’t have picked a better location! Right here in the downtown Phoenix historic neighborhood I grew up in, we are deep in the foreclosure crisis. My neighborhood was a poor Mexican-American neighborhood during my childhood, and until last year had become one of the most expensive, desirable neighborhoods in Phoenix, close to jobs and downtown entertainment in a city now known for the worst urban sprawl around. In the past 15 years, most home values in my neighborhood had more than tripled, much of that gain between 2001 and 2006. These 10 square city blocks have been a speculator’s paradise. Today, while my neighborhood is still beautiful, historic, and well-loved, there is an auction sign on almost every street. Numerous houses with now dead trees that have been sitting empty for going on two years now. Home values in the worst cases are almost back to the levels of my childhood. While this is good news for affordable housing, it is very distressing to neighborhood residents. Yet, this neighborhood is one of the lucky ones in Phoenix, because its prime location will eventually help it weather the storm. Neighborhoods in many suburbs are far worse off… Obama’s plan couldn’t come too soon for Phoenix.
Today at Dobson High School in Mesa, AZ (part of the Greater Phoenix Valley), Obama unveiled his plan to hault the foreclosure crisis. He outlined the urgent need for a solution not only for responsible homeowners that are in trouble, but also to prevent the crisis from wreaking further havoc on the economy as a whole.
His $275 billion dollar plan has four parts:
1. 4-5 million eligible homeowners who received mortgages through Fannie Mae or Freddie Mac will be able to refinance and restructure their mortgages. This will focus on homeowners who are underwater. It will reduce monthly payments, but not loan principle (as I had hoped). The estimated cost of this program is 0! The expenditures should be offset by benefits associated with a reduction in defaults and foreclosures.
2. New incentives so lenders will work with borrowers to modify the terms of subprime loans on principal residences. It will now be mandatory for lenders who want to receive federal assistance to reduce payments to no more than 31% of a borrowers income!
3. $200 million will go to buy preferred shares in Fannie Mae and Freddie Mac. As President Obama stated, “Using funds already approved, the treasury will continue to purchase securities of Fannie and Freddie, and will work with State housing authorities… to increase their liquidity.”
4. A wide range of reforms to help families stay in their homes. Bankruptcy judges will now be able to reduce the value of the home to fair market value with court-ordered payments.
This plan is not perfect—I wish it were even more far-reaching in terms of modifying loan principal on overvalued mortgages– but I believe it is as necessary today as the Home Owners’ Loan Corporation (HOLC) was during the Great Depression.
I’d like to conclude this post with a dream for my hometown coming out of this crisis. Ultimately, my hope is that the recovery after this foreclosure crisis will help us think about intelligent, long-term, green housing development and planning. In Phoenix, this is a very tricky thing to do, both because the economy has been built on housing growth and because many experts are now predicting that Phoenix will be unlivable by 2025 due to global warming, nevermind severe water shortages. How can a sprawling city of 6 million in the desert shift gears toward sustainability? The only answer, in my opinion, is to get smaller and more compact—not something the city at any time, nevermind in the midst of economic recession, is keen to do. I’m not sure many of my neighbors would agree either, but I feel it needs to be said. So that 15 years from now, the poor are not the ones once again dying of thirst and lack of clean water as when tragedy struck in New Orleans. We also need to collectively choose a new, green economy built on the industry of solar power generation.
Here’s my dream program for Phoenix:
1. An immediate ban on new housing developments in suburbs.
2. A job transition/training program for housing-industry workers to become green builders/retrofitters.
3. Big incentives for Green Revitalization– super-energy efficient building, remodeling, and retrofitting in city centers and surrounding neighborhoods, and along the light rail line (Kudos to the city for just completing it in December ‘08!)
4. Not only would this new Green Revitalization focus on energy efficiency, but on solar panels for every rooftop, especially those on abandoned buildings (which the city should buy and turn into mini-energy farms), and perhaps more importantly the city should install high-end rainwater collection systems on every residence and commercial property. [With state and city governments currently massively in the red, the Federal government would have to provide grants or guaranteed loans to make this possible.]
5. Phoenix should lead the nation in wastewater management, offering incentives for high-tech gray water systems in all commercial properties as a start, and creating a government program with free maintenance and installation to provide composting toilets for every home and business in the Valley.
6. A massive city-wide effort to combat the urban heat island effect with creative community gardening, urban forestry, zeriscaping, and permaculture initiatives. In Phoenix every degree of warming will count!
7. The Federal government would provide incentives and loans to businesses, particularly water intensive ones to move to more conducive regions, as well as relocation assistance for low-income workers to find good jobs in areas that can support larger populations sustainably. (This last one would clearly be the most controversial of all.)
This would stimulate the economy by creating thousands of green jobs, and would prepare Phoenix over the long-term to become a small, compact, self-sufficient city in the desert, overseeing the lucrative industry of solar power generation. Abandoned suburbs could even become critically-needed solar farms!
Filed under:
Politics, The Big Picture by Celeste
