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December 15, 2005 6:08 AM   Subscribe

Loans over $10,000 require collateral ... (NYT link gen) The SBA (loan officers wanted ), which runs the federal government's main disaster recovery loan program for homeowners, has rejected 82 percent of applications. (17,463 home loans approved, 77,000 rejected - though some must get rejected in order to receive smaller FEMA grants...)
posted by R. Mutt (49 comments total)

 
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posted by R. Mutt at 6:16 AM on December 15, 2005


If only the government would apply the same scrutiny to those defense contracts it hands out.
posted by three blind mice at 6:17 AM on December 15, 2005


Same thing after 9/11.

So, you will give me money to rebuild in a very uncertain and unpredictable business environment, and I risk whatever it is I have managed to hold on to.
posted by StickyCarpet at 6:34 AM on December 15, 2005


$10k isn't enough to rebuild a garage.
posted by wakko at 7:05 AM on December 15, 2005


Can't you spin this a bit better? I mean, it makes it look like someone in the administration might be dropping the ball.

How about:

The SBA has already granted over $17,463,000 in disaster recovery loans to victims of Hurricane Katrina.

Much better.

Oh, and send George back to Kinko's to get some more of those repeated-phrase backdrops printed up. "Rebuilding America" or something should be fine. It'll keep him out of our hair for a few hours.

- Karl Rove
posted by chasing at 7:28 AM on December 15, 2005


(Not only am I not funny, but I can't do simple multiplication.)
posted by chasing at 7:29 AM on December 15, 2005


ya know...it's called a "loan" not a "gift". I couldn't get a loan either if my credit rating was bad or my income too low.

I'm torn on this one.. Here's how I look at it. People choose to live in a flood prone area, people choose to live in an area frequently hit by Hurricanes, people choose to live a life style that results in a poor credit rating.

I realize that there are those cases for which poverty/poor credit rating is a result of factors out of their own control, but that percentage is very low. Interest free gifts for the disabled, fine... loans that won't be paid back for those who have consistently made bad choices, not so fine.

Personally i would rather that my tax money didn't go to building cheap wood houses below sea level...
posted by HuronBob at 7:30 AM on December 15, 2005


There are people that had decent levels of income prior to this disaster, but they may not currently be making the good money they were prior because their place of employment is gone - like teachers and nurses. So how they measure the income could have a big impact on who would qualify.
posted by raedyn at 7:46 AM on December 15, 2005


People choose to live in a flood prone area, people choose to live in an area frequently hit by Hurricanes, people choose to live a life style that results in a poor credit rating.

Oh yes, I forgot! Because if you're born to a poor family, cannot afford anything but the poorest education, and receive no financial training it is all your fault when you stay poor and don't have the money to move. I mean, damn, it is so easy to get rich! I don't understand why poor people don't just do it!

Golly, if I had to choose between paying for food and heat for my kids and establishing a good credit rating, well, you just can't understate the importance of a good credit rating, right?
posted by schroedinger at 7:52 AM on December 15, 2005


Yeah, sucks for them.
posted by smackfu at 7:55 AM on December 15, 2005


Would you personally loand money to someone with little or no collateral and/or a poor credit rating? Why should the goverment? Take as an example college loans: how many defaults on those? and those a good risk.

Now it is important to help those in need but if is what is to be done, then why not simply hand out money and not use the Apply for a Loan approach?

If IL were to lend money, I would dcertainly insist on flood insurance in full before handing out money to rebuild in flood zone (ps: I pay this now and I live in Connecticut!)
posted by Postroad at 8:03 AM on December 15, 2005


Yes but what's the alternative? These people lack the ability to pay back loans. If we want to take a paternalistic standpoint here, we have to go all the way. The government should go in there and contract home repair, not simply give these people $30,000 to repair roofs and what not. I don't believe giving a check for $30,000 is the best way to go. What if they chose to spend the money on a new car? Then the roof is still broken should the government still be responsible for the roof? I'm just trying to illustrate that this isn't a black-and-white (no pun intended) issue.
posted by geoff. at 8:10 AM on December 15, 2005


People choose to live in a flood prone area, people choose to live in an area frequently hit by Hurricanes, people choose to live a life style that results in a poor credit rating.

I'm tired of hearing this bullshit. You sound like a mini me Jerry Falwell.

So where are people suppose to live? I don't think Connecticut(some of the safest places can be found here) can handle 350 million people.
posted by MrMulan at 8:23 AM on December 15, 2005


"I'm tired of hearing this bullshit."

Welcome to the real world.
posted by mischief at 8:36 AM on December 15, 2005


The crime here is that Bush is talking about doing "whatever it takes" to rebuild, but the government won't budge on loan qualifications. Now who gets to rebuild New Orleans? The rich. The poor, as before and during the disaster, are being shafted after the disaster.

To automatically think that someone, or even a group of people, with a poor credit rating has made "poor choices" is to take the paternalistic attitude that leads to the exclusion and oppression of the poor in the first place.

"It's just a bunch of lazy black people, they'll just buy car stereos and crack" right?
posted by swift at 8:40 AM on December 15, 2005


Didn't the article make it clear enough that the loan was only one type of aide that can be sought? The system is, you can get free grant/aide if you are poor and can't get a loan. To get that, you have to apply for the loan. If you get the loan, you have to use that. If you can't get the loan, then you get the free grant.

I thought the article made that point but the comments don't seem to recognize it.
posted by dios at 8:52 AM on December 15, 2005


We've spent 200 billion installing a Shiite theocracy in Iraq so far. A tiny fraction of that could have covered the losses on these loans.
posted by cytherea at 8:59 AM on December 15, 2005


If only the government would apply the same scrutiny to those defense contracts it hands out.

It's easy to make flip remarks, but not so easy when you are a steward of the taxpayer's dollars. I take my responsibilities seriously, and I don't 'hand out' contracts. I award them to the responsible offerer, while complying with seventy million different set-aside programs including women owned, small disadvantaged business, disabled veteran...
posted by fixedgear at 9:00 AM on December 15, 2005


What's wrong with just fixing these homes? The government should just hire thousands of newly unemployed NOLA residents and go house to house, fixing whatever needs to be fixed.

These homes were destroyed by flooding due to government negligence, and the government should fix what it broke.

Need a new roof? You got it.

Need drywall replacement? We're on it.

Want to turn your crappy little house into a huge palace? Not so much.

The government could buy construction materials in huge quantities, for wholesale prices, and just rebuild.

And it'd cost way less than $200,000,000,000.
posted by bshort at 9:07 AM on December 15, 2005


Swift (and others who objected to my comment)..

I'll stand behind the belief that allowing people the opportunity to make life better for themselves is the ONLY way to improve anyone's position/status/wealth in this culture.

No, I'm not a republican, nor a christian, but I've lived long enough to know that every successful person I have ever met was successful due to the effort and choices he/she made over their lives.

People are NOT empowered by taking away their right to make choices or their right to deal with the consequences, good or bad, of the choices they make. Take care of someone long enough and they'll forget how to take care of themselves.
posted by HuronBob at 9:07 AM on December 15, 2005


We've spent 200 billion installing a Shiite theocracy in Iraq so far. A tiny fraction of that could have covered the losses on these loans.
posted by cytherea at 10:59 AM CST on December 15


Interesting point, cytherea. There are lots of things we could have saved money on and not had this problem in New Orleans or fund the repair. We could not donate any money to those people in Iraq to help them and keep it all for ourselves. The same with Africans with AIDS; we don't need to be spending billions to help them with their problem---we need that money here at home. And how much money are we wasting on them people in South America. Or how about we demand all that Tsunami relief back?

But, those are humanitarian things, maybe they should be spent. How about completely frivolous spending that could be going to the New Orleans area? How about we scrap the NEA? There's a good chunk of change. How about we cut that _____ million dollar highway project in your city?
_____

There are all kinds of decisions the government has to make about priorities. To try to turn this into a justification against the liberation of Iraq seems to be forced. Why doesn't your same argument apply to all international aid? Are Iraqis somehow not important enough to receive aid or somehow less important than some other international group? Or what about all the discretionary, non-essential spending?

My guess is that you are more interested in making some callow point about Iraq then you are in trying to figure out ways to cut spending to help New Orleans people.
posted by dios at 9:13 AM on December 15, 2005


"What's wrong with just fixing these homes?"

Many of those that weren't completely destroyed by the storm itself have been rendered permanently uninhabitable by the subsequent mold.

"The government should just hire thousands of newly unemployed NOLA residents and go house to house, fixing whatever needs to be fixed."

You are assuming they have the skills. These people were making minimum wage or living off social security and not the kind of "workforce" that could do a passable job at roofing and drywall.
posted by mischief at 9:18 AM on December 15, 2005


I'll stand behind the belief that allowing people the opportunity to make life better for themselves is the ONLY way to improve anyone's position/status/wealth in this culture.

But you're not allowing them the opportunity. You're not allowing them any opportunities at all--that's the reality people in poverty face. You think opportunities drop in people's laps and they ignore them? The point is they are where they are because they don't have opportunities. Because they didn't have an opportunity to go to a better school, they didn't have an opportunity to go to college, they didn't have the financial opportunities to move somewhere, they didn't have the opportunities to build the skill set that would allow them another job, they didn't have alternatives to paying for things with money they didn't have.

And if they screw up, if they screw up once, unlike someone from a richer background they don't have the opportunity to repair their mistake. The rug isn't pulled out from under you--the whole damn house is. You don't have a parent who will help you fix your car so you can get to your job, you don't have a savings account to dip into to pay your credit card bill, you don't have the resume to apply for a better-paying job to help you pay off your debts. You don't have a family who can help you take care of your kids while you go to school because they're working two, three jobs too.

Poverty isn't just about not having money. It's far more pervasive than that. You look at every aspect of your life that makes it easier--the extra clothes, the access to laundry, the house over your head, the food--that make it possible to earn money and keep earning it, and ask yourself what would happen if those things weren't available.
posted by schroedinger at 9:27 AM on December 15, 2005


My guess is that you are more interested in making some callow point about Iraq then you are in trying to figure out ways to cut spending to help New Orleans people.

That's it. I've tried to be nice and engage you in a decent fashion. But you're just not worth it.
posted by cytherea at 9:29 AM on December 15, 2005


"You think opportunities drop in people's laps and they ignore them?"

Yes, opportunities most definitely do drop in people's laps, and yes, those people most definitely do choose to ignore them.
posted by mischief at 9:32 AM on December 15, 2005


Why doesn't your same argument apply to all international aid?

Because most other international aid isn't delivered through the barrel of a gun.
posted by PinkStainlessTail at 9:34 AM on December 15, 2005


Because they didn't have an opportunity to go to a better school, they didn't have an opportunity to go to college, they didn't have the financial opportunities to move somewhere, they didn't have the opportunities to build the skill set that would allow them another job, they didn't have alternatives to paying for things with money they didn't have.

There are mountains of anecdotal evidence to prove these statements wrong. There are always stories of people rising from the slums to great heights. So it is wrong to say they have no opportunity. It is more correct to say that it is much harder for them. Perhaps one doesn't want to blame such people for not making the really difficult effort to improve their lot in life, but to excuse it entirely as an impossibility eliminates any personal responsibility for the failure to do so. I think in every person's life there is some point where they have they have an opportunity to make a decision regarding what path to take. Unfortunately, one path may seem so difficult as to be impossible.
posted by dios at 9:35 AM on December 15, 2005


People are NOT empowered by taking away their right to make choices or their right to deal with the consequences, good or bad, of the choices they make. Take care of someone long enough and they'll forget how to take care of themselves.

Helping people in a time of crisis is not taking away their choices. My point is that getting a loan to rebuild after your whole city is flooded should be a lot easier than getting a normal home-improvement loan. The worst-case scenario is no one rebuilds and everyone defaults on their loan. The best-case scenario is everyone rebuilds, and everyone pays back their loans, improving both the community and their own credit. I'd gamble on the second, because it's worth the risk, but also because it's moral.

If your neighbor wants to borrow your moped, and he's a terrible moped driver, it's a risk to give it to him, and you shouldn't. If your neighbor's wife is in labor and he has to drive her to the hospital, it's still a risk -- even more of a risk, in fact -- but you should do it. It's an emergency, and you should lower the standards by which you loan out your moped not only out of charity, but because there is great risk to more people if you don't.
posted by swift at 9:37 AM on December 15, 2005


one path may seem so difficult as to be impossible.

I meant to say... "as to seem impossible."
posted by dios at 9:39 AM on December 15, 2005


I think you were right the first time -- "seems so difficult as to be impossible" == "seems so difficult it seems to be impossible /grammarfilter
posted by swift at 9:48 AM on December 15, 2005


I thought the article made that point but the comments don't seem to recognize it. - dios

The article did make that point. But, as is often the case, many have a case of didn't-read-the-link-but-commented-anyway-itis. Apparently, we all feel entitled to an opinion without bothering to make it a terribly informed opinion. This isn't the first time.
posted by raedyn at 9:51 AM on December 15, 2005


I think you were right the first time
posted by swift at 11:48 AM CST on December 15


Bah. I don't even know anymore, so I'll defer to you on that one!
posted by dios at 9:56 AM on December 15, 2005


Apparently, we all feel entitled to an opinion without bothering to make it a terribly informed opinion. - raedyn

I'm guilty of it too, of course. I'm trying to reduce my use of this annoying habit, but I'm far from perfect.
posted by raedyn at 9:59 AM on December 15, 2005


"Now who gets to rebuild New Orleans? The rich."

I thought it was illegal immigrants. Meanwhile, the folks that actually lived there can't get back in.

Another article on it.

Looks like the rich are just overseeing the projects, and New Orleans will remain poor - just a drastically different color.
posted by drstein at 10:01 AM on December 15, 2005


dios writes "There are always stories of people rising from the slums to great heights."

And since there are a few exceptions to the rule, we're all comfortably free to consider the vast majority that never had any opportunity a bunch of lazy selfish bastards who deserve anything that happens to them, including but not limited to, having all their few possessions destroyed because they have "chosen" to live in a place that could be hit by hurricanes or flooded. Because what is being discussed here is not "let us baby-sit this people through life" but "let us help re-build the little they had before the disaster".

dios writes "It is more correct to say that it is much harder for them."

It is probably correct to say it is plainly impossible in some situations. And it is also probably correct to say it is so hard that most middle-class people would have given up well before obtaining the little some people living in poverty manage to get.
posted by nkyad at 10:19 AM on December 15, 2005


Didn't the article make it clear enough that the loan was only one type of aide that can be sought? The system is, you can get free grant/aide if you are poor and can't get a loan. To get that, you have to apply for the loan. If you get the loan, you have to use that. If you can't get the loan, then you get the free grant.

Here's what the article says:
Both agency officials and some critics of the federal government say that many applicants do not really want loans, but must go through the agency's loan process - and be rejected - in order to be eligible for certain grants from the Federal Emergency Management Agency. (FEMA does not dispute this but says it cannot give these grants to people who have enough money to take out loans. It gives other grants for home repair in certain circumstances, but only for up to $15,600.)
My understanding is the FEMA grant is smaller.
posted by swift at 10:25 AM on December 15, 2005


There are mountains of anecdotal evidence to prove these statements wrong

Anecdotal evidence! Beautiful, yes, let's play with people's lives based on anecdotal evidence. I mean, no reason to get a little thing like scientific evidence bother us when we've got the anecdotal kind.

You know why this pisses me off? Every day I work with people who are trying desperately to remove themselves and their families from this situation. And yes, there are people who aren't. But most of them would give anything to leave the slum they're stuck in. They work two or three jobs, they deal with crippling medical problems without any money to treat them, they battle against addictions to those substances that take them away from the utter despair of their daily lives, and they gotta listen to utter shits tell them they're not working hard enough and if they just made the right choices all the time everything would be OK. Because the rich got rich because they're perfect and make perfect choices, right?

Oh, don't think I've got illusions of the working-class man as some unsung, perfect hero--if he's to succeed the way you want him to, he has to be in order to not drop lower than he already is.
posted by schroedinger at 10:27 AM on December 15, 2005


Both agency officials and some critics of the federal government say that many applicants do not really want loans, but must go through the agency's loan process - and be rejected - in order to be eligible for certain grants from the Federal Emergency Management Agency. (FEMA does not dispute this but says it cannot give these grants to people who have enough money to take out loans. It gives other grants for home repair in certain circumstances, but only for up to $15,600.)

Swift, I don't see that it says the FEMA grant is smaller. I don't read it as saying the FEMA grant is $15,600.

It is a terribly written sentence that is really confusing to parse. But from reading it, I see it as saying there are three sources of money:

1. certain grant s from FEMA
2. loans for those who have enough money and can get a loan from the SBA.
3. "other grants for home repair in certain circumstances, but only for up to $15,600.

To be honest, I don't know for a fact what the situation is. I am just going off this article here. But I think, as a grammatical matter, there are three categories of funds mentioned in that paragraph.

It could certainly be clearer.
posted by dios at 10:30 AM on December 15, 2005


There are mountains of anecdotal evidence to prove these statements wrong. There are always stories of people rising from the slums to great heights.
There are mountains of anecdotal evidence to prove that a poor person can be lifted from poverty by purchasing the correct lottery ticket.

That's the problem with anecdotal evidence. Can you produce, say, any statistical evidence that income mobility is improving or even staying the same for those in poverty?
posted by verb at 10:31 AM on December 15, 2005


schroedinger, I never said anything negative about people who do work hard to improve their lot. I respect such people. All I said is that when discussing the poor, it is incorrect to say it is impossible (because that obviates personal responsibility; if it is impossible, why try?). I never argued all of them are lazy, nor would I. That would be a clearly incorrect statement. But there are people who incrementally improve their lives through hard work (the guy who mows a long and starts his own mowing company, and grows to having some employees). To say it is an impossibility is an insult to the people who do try and do make something themselves. Of those people, I have the highest respect.
posted by dios at 10:35 AM on December 15, 2005


verb, my point isn't to prove the probability, only to suggest that the possibility exists. The post I was referring to was an attempt to say it was impossible for people who come from poor backgrounds to be anything but poor and helpless. I was addressing the problem with that statment.
posted by dios at 10:37 AM on December 15, 2005


wakko penned "$10k isn't enough to rebuild a garage."

That's, ah, quite the garage.


geoff. penned "The government should go in there and contract home repair,"

Thorny problem, the history of the goverment building homes has rarely been good. I wonder if they wouldn't be better off dealing with an architechural company to develop plans for a small range of houses. Create regionalized base plans for each of a half a dozen price points and then offer funding for disaster victums to build those houses.
posted by Mitheral at 10:54 AM on December 15, 2005


verb, my point isn't to prove the probability, only to suggest that the possibility exists. The post I was referring to was an attempt to say it was impossible for people who come from poor backgrounds to be anything but poor and helpless. I was addressing the problem with that statment.
Good point, dios. However, I didn't see anyone suggesting that it was impossible for a poor person to work their way up. Rather, that the odds of this happening have been steadily declining over time, that the number of opportunities for it have been dwindling, and that many of the societal helps that have existed to aid this process are being eliminated.

It seems strange to me that many will argue in that everyone benefits when the already-successful are given more breaks. Their success will help everyone, goes the reasoning. But when a similar argument is made for helping the poor, the answer reverses itself. Helping THEM is a drain on society, and will drag us all down.

I know that's not precisely what you were saying in this post, just reflecting on the strangeness of it; it does tend to come up in discussions like this.
posted by verb at 10:58 AM on December 15, 2005


However, I didn't see anyone suggesting that it was impossible for a poor person to work their way up.

Well, maybe I was reading it too literally, but I think one user was saying it here:

You're not allowing them any opportunities at all--that's the reality people in poverty face. You think opportunities drop in people's laps and they ignore them? The point is they are where they are because they don't have opportunities. Because they didn't have an opportunity to go to a better school, they didn't have an opportunity to go to college, they didn't have the financial opportunities to move somewhere, they didn't have the opportunities to build the skill set that would allow them another job, they didn't have alternatives to paying for things with money they didn't have.

"do not have the opportunity" seems to be equivalent to "impossible."
posted by dios at 11:00 AM on December 15, 2005


I'm just wondering if Trent Lott needs a loan to rebuild his porch. I'd hate to see him get rejected.
posted by R. Mutt at 11:03 AM on December 15, 2005


Swift, I don't see that it says the FEMA grant is smaller. I don't read it as saying the FEMA grant is $15,600.

No, I understood that. The 15K is a separate thing.

I guess I was assuming the grant is smaller based on the FPP, thinking I'd missed something in the article:

(17,463 home loans approved, 77,000 rejected - though some must get rejected in order to receive smaller FEMA grants...)

Maybe R. Mutt can enlighten us.
posted by swift at 11:08 AM on December 15, 2005


Dios:

Point taken. I think that sort of statement can be taken as rhetorical flourish, in the same way that you said that there are 'always' stories of poor people working hard and rising up out of poverty.

Another user said it with a bit more precision:
It is probably correct to say it is plainly impossible in some situations. And it is also probably correct to say it is so hard that most middle-class people would have given up well before obtaining the little some people living in poverty manage to get.
Perhaps we can all agree that there are outliers (zero opportunity, and inspiring success) but that the majority in the middle face a serious dearth of opportunities. It is a slow, difficult climb out of a deep hole, and society is very busily removing rungs from the ladder.
posted by verb at 11:16 AM on December 15, 2005


I realize that there are those cases for which poverty/poor credit rating is a result of factors out of their own control, but that percentage is very low.

Dude, you're an idiot, and you're wrong.
posted by Civil_Disobedient at 5:07 PM on December 15, 2005


Postroad: Would you personally loan money to someone with little or no collateral and/or a poor credit rating? Why should the goverment?

Because its the least we as a society can do for people who may have previously been members of the "ownership society". Many people have lost everything, need help, and are willing to take on the obligation of a loan to rebuild thier lives and community. What the hell more do you want?

The government is not an individual or a for-profit enterprise, like say CitiBank, and shouldn't operate under the same narrow rules in the face of such a disaster.

Take as an example college loans: how many defaults on those? and those a good risk.

OK, let's take college loans. Some people do default on thier college loans, and they should be held accountable. But to deride the college loan program because of a small percentage of bad loans is pathetic. Is the US better off because of the millions of kids (most with unproven credit) that used loans to get an education? Yes.
posted by R. Mutt at 5:08 PM on December 15, 2005


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