Best way to fight state’s foreclosure crisis is getting Georgians employed

By Guest Columnist CHRIS CUMMISKEY, commissioner of the Georgia Department of Economic Development

In her guest column of June 17, Kate Little, president of the Georgia State Trade Association of Nonprofit Developers, makes two points about the dispensation of National Mortgage Settlement (NMS) funds in Georgia: (1) that “none of these funds will go to address foreclosures,” and (2) that both “REBA and the OneGeorgia Authority will use the funds to attract jobs to rural Georgia,” allegedly slighting homeowners in Atlanta and Georgia’s other metro areas.

I want to correct both these assumptions. But first, let me say that there is something on which I wholeheartedly agree with Ms. Little: Georgia homeowners are struggling and need relief. Unemployment is still too high, and recovery is still slow. During these last few years, we at the Georgia Department of Economic Development have been acutely conscious of the critical nature of our mission to ensure jobs are being created here in the state.

And that brings me to an important point regarding her first message. The best way to help people pay for their homes is to employ them. The leeway allowed states in the administration of these funds means that each state can take the steps that best address the foreclosure situation within its boundaries.

In Georgia, our governor and legislature rightly addressed the root of the problem instead of a Band-Aid solution. Employed people pay mortgages. So rather than subsidize additional public dependencies, the state of Georgia will incent private investment that directly provides jobs for the unemployed.

Georgians, employed or not, make hard decisions every day about how to allocate income. According to the U.S. Bureau of Labor Statistics 2009 Consumer Expenditures report, a household of 2.5 people spent 26 percent of their gross budget on housing, 12.1 on transportation and 10 percent on food. Consumer spending on all these items fell in 2010 and has remained flat, as have incomes.

Yes, it’s a direct action to pay off mortgages using these funds. But does it stop the cycle, or solve the root problem? It does not.

Increasing the job market addresses not just people’s housing situations, but overall quality of life. Earning an income enables a person to keep a roof over his or her head, buy food, get around. That income then circulates through the economy, enabling other jobs to be created. In addition, when people have jobs, they need less government assistance, whether it’s local, state or federal. It’s a win all the way around.

Besides, Georgia already has a program that renders direct assistance for citizens facing foreclosure. It’s called HomeSafe Georgia. Part of the U.S. Treasury Department’s Hardest Hit Fund, it provides up to 18 months of help with mortgage payments for unemployed or underemployed Georgians while they look for work, and provides for further relief for five years following that period.

With HomeSafe Georgia, the state, through the Department of Community Affairs (DCA), has already committed $30 million to assist families with mortgage payments, out of a total $300 million available. It makes more sense for the NMS funds to complement this program, not duplicate it.

Let me also address an erroneous claim made by both Ms. Little and Andy Schneggenburger, quoted in the June 17 article. Whereas the OneGeorgia fund does indeed address the needs of Georgia’s rural communities, the Regional Economic Business Assistance fund is available to any Georgia community, rural or urban. Atlanta or Albany, Alma or Ashburn – all are eligible. Complete information about the program is available at the website mentioned by Ms. Little, and I challenge anyone to tell me where it says that this program discriminates against metro communities. It does not.

In fact, let me point out that of the $99 million that became available to Georgia through the NMS, the bulk – $67 million – was allocated to REBA so that it will be available to any qualified community that needs it, metro or rural. Putting the greater amount in REBA gives the state much more flexibility to encourage companies to grow in the Georgia community, large or small, where it will find the most success.

And it is the jobs that these new and expanding companies create for Georgians that will, in the end, jump-start our economy. It is corporate and personal income tax revenue that will “help neighborhoods and communities to reclaim vacant and abandoned foreclosed properties…(stop) the encroachment of blight, the creation of public safety hazards, and falling property values.”

Ms. Little is right to be concerned about all the ramifications of the foreclosure crisis. She is just wrong about the most effective way to go about it.