I can’t help myself I have to release my gut reaction to the news I read today about the Governor putting together a $20M fund to buy bank owned property.

The Herald reported today that (in case you’re wondering I read it online, I don’t buy the Herald):

Massachusetts will create a $20 million fund to acquire vacant foreclosed properties so they can be turned over to nonprofit housing developers and kept away from real estate speculators, Gov. Deval Patrick said today in a sweeping economic address.

OK a few questions

1. Where is the money coming from?
2. Who are these nonprofit housing developers?
3. Who is going to live in these?
4. What is so wrong with speculators?
5. How do you think this is going to fix the market?

How is this going to fix anything? Let’s do some quick math. Lets suppose that the per unit cost for the bank owned properties is as low as $70,000. So that is an average of $140,000 for a 2 family, $210,000 for a 3, $280,000 for a four; all together Governor Patrick can buy 285 units or about 95 properties for that money; and yes he must be talking about 2-4 unit properties because that is where most of the trouble lies today, he’s not talking about large apartment buildings because believe me if there a bunch of those bank owned you and I would be buying them already.

So 95 properties…OK WHERE? I read (or maybe I heard it on NPR) the other day that foreclosure petitions are hitting the Massachusetts courts at a rate of 145..PER DAY. So….what we (Massachusetts tax payers) are going to buy a little less than a day’s worth of foreclosures? ForeclosuresMass reports that there have been 6826 foreclosures initiated in the last 60 Days.

Speculators are the market. This is a market problem you have to let the market fix it. The Governor cannot fix this with a measly $20 Million bucks, its impossible. He won’t even make a scratch not even a dent. This is a terrible plan. If you’re going to burn $20M of my tax dollars at least pretend its going to be worthwhile. Give it to the damn Salem school that just got screwed in accounting but for goodness sake you’re talking about putting your damn finger in the dike.

Speculators are you and I. They are small independent investors who can actually keep a buck in their pocket long enough to invest it. We’re not pirates or con men. We keep the economy turning, sure we want a deal who doesn’t? But it’s not like we’re going to buy these properties and then sit on them vacant, producing no income. These properties will need to be rehabbed and filled and that is part of the cycle. This isn’t the first time and it won’t be the last.