The city of Menlo Park, California, wants to use taxpayer money to buy out houses facing foreclosure, then set up new mortgages at 70 percent of the old value with new banks, and then hope that when the house is resold, it makes up for the loss. If the house is sold for less, the city loses money on the deal.
When unveiling his housing plan, President Obama said, “It will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans.” While the federal government may not be doing this, this is pretty much what Menlo Park is doing. They’re essentially using taxpayer money to give certain homeowners a 30 percent cut in their mortgages.
I wonder if Menlo Park feels they can use $2.5 million of tax revenues on this because they’re getting $6.9 million for their Science Center from the stimulus bill.