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So… How About that Homestead Act, Congresscritters?

August 15, 2008

In light of this atrocious story, it might be time to think about some new initiatives. (H/T: Zillow Blog)

Not only is the bank owner losing any potential value in this property, but it will cost the bank an additional $10,000, “to pay $2,500 in sales commission and another $1,000 bonus for closing the $1 sale; the bank also will pay $500 of the buyer’s closing costs. Throw in back taxes and a water bill, and unloading the house will cost the bank about $10,000.”

It is well past time for us to consider a new 21st century Homestead Act.  I wrote about this previously as well, but the sight of a $1 house is evidence that something dramatic needs to be done.

  • Rough outline of a new Homestead Act:
  • Banks surrender the property to the municipality.  They can claim a loss for future tax writeoff, but importantly, they get the property off their balance sheets.
  • Municipality waives all back taxes, transfer fees, etc.
  • Utilities write off all water/electric bills, etc.
  • Property is made available as is to any legal resident willing to live there.
  • You must stay in the residence for at least five years.
  • During your stay, you must maintain the house in reasonable condition and not engage in any illegal activities in the house.
  • It must be your primary residence for those five years.
  • You must pay all property taxes and fees associated with homeownership, such as for trash removal, water and sewage, etc.

At the end of the five year period, the homesteader receives full title to the property free and clear.

In a stroke, you have eliminated the foreclosure problem, provided a path out of urban blight issues, and provided low-cost housing to families who actually want to work at achieving their American dream.

It’s time.

-rsh

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2 Comments leave one →
  1. January 29, 2009 5:11 pm

    I agree wholeheartedly!!!!!!!! I watched all of this happen when Carter was Pres, and he was too stupid to fix anything (grain embargo cost?). I was a CPA then and have been until 2004. Now that I have been through these difficult times before, I have never seen us so close to socialism (bailout funds & Barack Stimulus, $750 Billion+$825 Billion, UNACCOUNTED Taxpayer funds) and see nothing intelligent as your idea. How do we accomplish this-I have written everyone I can think of, with no response of course. Surely there is something in the Constitution that helps us do what we know is best for our “pursuit of happyness”, but I can’t find it! Thanks for your courage to post a realistic idea to fix a mess where it started, not make up crap. Are you aware of any method we can force our government to do something intelligent with our money. PLEASE ADVISE IF YOU DO AND COUNT ME IN.
    THANKS AGAIN FOR YOUR THOROUGH ANALYSIS AND BRILLIANT SOLUTION TO FIX A SIMPLE PROBLEM OF LENDING FRAUD, WHICH IN TURN WILL REPAIR THE ECONOMY FASTER THAN HANDOUTS.

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  1. Real Estate Homestead Idea | Atlanta Real Estate Resource | Homes in North Atlanta: Marietta, Woodstock, Canton & Alpharetta | Atlanta Commercial Real Estate

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