Vail Daily’s View: Frustrating, but delay in ‘smart loan’ program makes sense | VailDaily.com

Vail Daily’s View: Frustrating, but delay in ‘smart loan’ program makes sense

Vail Daily Editorial Board
Vail, CO, Colorado

Maybe we should be glad, in a way, that the politicians can’t bully federally run home-loan programs these days.

Frustrating, sure, when one part of the government delivers Eagle County and others a grant to help start up the “smart loan” program aimed to make homes more energy efficient.

But didn’t the ability to make Fannie Mae and Freddie Mac deliver loans to folks who couldn’t afford to pay them help inflate the real estate bubble that did so, so much damage?

The county’s program won’t begin until the government and lenders iron things out. The problem concerns the order in which the loans for energy-efficient home renovations fall in the repayment scheme.

The program is set up so that these loans become part of the property tax bill. The federal agencies view this payment as “senior” and therefore making it harder for home-loan lenders to get their payments in the case of default. So the home loan becomes riskier to the lender to the point that Fannie Mae has announced it won’t deal with loans with these “smart loans” attached to them. If it won’t deal with them, it’s unlikely others will.

Oh boy.

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Local governments including Eagle County protest this. There are all sorts of other assessments attached to property taxes that don’t interfere this way with home-loan lenders, they argue. Sidewalks, sewer and water lines, putting electrical lines underground – really, what’s truly different with these loans?

And so it goes. Governors, senators and Vice President Joe Biden have sought to clear this up with a little pressure. All they got so far was a letter from the Federal Housing Finance Agency backing up Fannie Mae. Take that.

It’s frustrating to have mixed messages from the government play out to such a degree, between awarding grants to get the loan program moving and waving furiously against the program at the same time. But that’s democracy for you – the worst form of governance ever other than all the other forms of government.

At the same time, though, maybe this is a good sign that the regulators and the lenders might actually have learned something from the big bad bubble burst that we’ll be recovering from for a long time to come.

Vail Daily Editorial Board