New CoH "product": Pay bills of bad credit risks to help secure home loans! (updated)

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The Chronicle‘s Carolyn Feibel alerts us this morning to an interesting item on the City Council agenda.

We’ll turn to the item first, then Feibel’s reporting:

21. ORDINANCE deappropriating $444,064.90 from the TIRZ Affordable Housing Fund 2409 (Fund 2409) under Ordinance No. 2008-828 for the Temporary Emergency Home Repair Program (“TEHRP”) in connection with Hurricane Ike Damage; approving and authorizing guidelines for a New Credit Score Enhancement Program; reappropriating $386,390.00 from Fund 2409 to a New Credit Score Enhancement Program, including delivery costs; and reappropriating $57,674.90 to the TEHRP for Project Delivery Costs

Here is Feibel’s description of what’s going on:

Houston taxpayers could start footing the bill to help first-time homebuyers pay off debts and improve their credit scores, under a proposal before City Council this week.

The “Credit Score Enhancement Program” will give up to $3,000 in grants to individuals who are trying to qualify for mortgages through the city’s homebuyers assistance program. City officials say some applicants fall short of eligibility by only 10 or 20 points on their credit scores, and paying off some debt balances can quickly improve their numbers.


The $444,000 for the program is leftover money from a $1.5 million appropriation the city made for emergency home and roof repairs after Hurricane Ike.

The city has three programs that provide grants for down payments and closing costs for qualified homebuyers. The most generous one offers a $37,500 grant to buy a home that costs $135,000 or less, but only in certain disadvantaged Houston neighborhoods the city is trying to revitalize. Participants cannot earn more than 80 percent of the Houston median income.

The story has some good back and forth between critics and proponents of the proposal.

Additional information can be found in the City Hall backup documents (PDF, Page 79). The language in that document is particularly amusing, as the city department actually calls this proposed (roughly half-million-dollar) program a “new product.” Only in the warped view of big government is this sort of wealth redistribution program a “product.” And it’s a product whose “customers” are going to cost the rest of us hundreds of thousands of dollars!

So, to sum up — bureaucratic busybodies in your municipal government are proposing to spend nearly half a million dollars on a “new product” that will help people who are credit risks game the system temporarily (at up to $3,000 a pop!) to take on home loans for which they wouldn’t otherwise qualify.

Have we learned nothing about personal (and government) finance in the last year or so?

Have we simply gone mad?

Mayor White frequently tells us he brings a businessman’s approach to municipal government. If that is anything more than campaign rhetoric, he will squash this bad idea.

UBU ROI ADDS: Not a chance. The agenda is 100% under the mayor’s control in Houston. Nothing makes it into the agenda without his agreement, and the general practice by mayors for decades has been not to add anything to it that they don’t have the votes for. Mayor White blew that once, when he tried to sell the land out from under the Center Serving Persons with Mental Retardation. If he’s put this on the agenda now, it’s because he thinks bailouts are the cause of the day and he can push this one through.

UPDATE: Here’s a fun video from Empower Texans.

UPDATE 2: The Chronicle reports that public outcry forced Mayor White to pull this proposal. However, we know that Mayor White rarely gives up on his grand plans, so expect something similar to return at some point, when fewer people are paying attention. It’s The Houston Way!

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