Schwarzenegger to offest housing slump by”¦building more houses?

The Govenator, Arnold Schwarzenegger unvelied a rather extensive plan to help “offset the housing slump” in California and by building new affordable housing and assistance retraining the 8,400 employees of former mortgage companies to help them corrupt move in to other industries such as health care and biotech. (Remind me to read the labels of any new medicines closely.)

The plan includes a bunch of worker retraining for those laid off by the industry. (As an aside we all know that the 8,400 is a joke, since many of the job losses were suffered by 1099 contractors in small shops who wouldn’t be reported as laid off.) Most surprisingly the plan calls for the building of new “affordable” housing. Which is where things start to get hazy for me. But first a recap of the plan.

From Governor Schwarzenegger’s plan to reduce the housing slump’s impact on California’s economy:

Governor Arnold Schwarzenegger today awarded $73 million for 40 housing projects in 26 cities across the state, helping 1,611 California families rent or purchase affordable housing.

The Governor also announced that the federal government today awarded up to $5.6 million to help mortgage and banking industry workers laid off as a result of the subprime crisis make career transitions to high-demand jobs in other industries. “We applied for this grant because we want to help displaced workers transition to new jobs and the money will go to the counties with the greatest need. We are not just sitting by and waiting for the economy to pick back up. We are taking all the action we can to keep people working and rebuilding California,” said Governor Schwarzenegger.

“Many of these laid-off workers have skills that are transferable to jobs in high-growth, high-demand industries, such as healthcare and biotech. We want to do whatever is possible to help them make this transition,” said Labor and Workforce Development Agency Secretary Victoria Bradshaw.

The grant from the U.S. Department of Labor will focus on 12 areas with the highest needs located in the following counties: Alameda, Contra Costa, Los Angeles, Orange, Riverside, San Diego, Sonoma and Stanislaus. One-Stop Centers in these counties have been providing rapid response services to the affected mortgage and finance workers and employers. These rapid response services, conducted with Workforce Investment Act funds, include information on the availability of unemployment insurance benefits and other employment services.

More Housing?

So let me get this straight? We’re going to pump another $100 million in to government sponsored building of new homes? What are they smoking up in Sacramento, and can a brother get some love? I mean I get helping displaced workers, and providing homeowner awareness and pushing for higher loan limits; but building affordable housing seems like a tremendous waste of money.

My thinking: if they just sit tight long enough pretty much everything inside of California (save the coast) will be affordable again. More housing cannot be the answer to an economic crash caused by? A GLUT OF HOUSING!

And to add insult to injury, wasn’t this whole mess precipitated by trying to get non-traditional homeowners in to homes? People bought homes they couldn’t afford, who didn’t have the credit stability to maintain the payments. Does anyone in Sacramento remember this? Wowsers. I’m truly baffled.

Counties that Need Help the Most

I love seeing Orange County on the list of counties that will receive the most worker retraining aid. Can you see the parking lot at the government offices during a training session? Unemployed loan officers in 525 BMW’s learning how to transition to biotech. I get giggly just thinking about the irony of it all.

Schwarzenegger Hard at Work

This is not the first package put together by the California government in an attempt to relieve some of the effects of the crashing California housing market. Here are a few others:

• Announced $69.5 million in permanent low-interest loans from the Proposition 1C housing bonds to jumpstart 14 affordable multi-family projects up and down the state helping more than 1,000 California families and individuals realize the dream of an affordable rental home.
• Announced more than $72 million in federal HOME Investment Partnerships Program funds to provide assistance to first-time homebuyers, reduce the number of bank owned homes and increase the number of rental properties.
• Called on Congressional leaders to quickly pass legislation to raise limits for government loan programs to help reduce foreclosures and allow more people to achieve the American dream with solid, responsible loans.
• Joined the OneCalifornia Foundation to announce a bridge loan fund for homeowners facing foreclosure in Oakland.
• Launched a $1.2 million public awareness campaign to help educate homeowners about options that can help them avoid losing their homes to foreclosures.
• Announced an agreement with major loan servicers to streamline the loan modification process for subprime borrowers living in their homes.
• Signed legislation to increase protections for Californians who own or plan to purchase homes and to expand affordable housing opportunities.

Of course Schwarzenegger has been campaigning hard for the conforming loan limit increase from the outset of the meltdown. Passed in the recent federal stimulus package, it now seems the loan limit increases will have a decidedly smaller impact than originally hoped for.
You Can’t Stop them from Trying

So while we’re all worried about a federal government bail out the legislators up in Sacramento have been busy printing money and spreading the love with an assortment of bond and other debt measures to ensure that I won’t be seeing a state tax break any time this millennium.

When Will They Realize?

When will the realization hit that they cannot control the crashing housing market? They cannot control the overbuilding that has been done. They can’t undue the rampant fraud that was perpetuated at all levels of the California real estate and mortgage pyramid. They can’t make Riverside a more desirable place to live. They can’t make everyone who was 100% financed equity positive.

They can do a little, and it will help a little - but no matter what this state is going to hurt bad for some time to come.

This post was found on BlownMortgage
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