Buying Real Estate With Big Help From Uncle Sam

Crain's Chicago Business reports:

William Towns is buying hundreds of foreclosed properties in some of the city’s hardest-hit neighborhoods, backed by an investor with the deepest pockets of all: the U.S. government.

As one of the Chicago heads of the federal Neighborhood Stabilization Program (NSP), Mr. Towns has spent the past 15 months scouting for foreclosed residential properties in depressed areas like Austin and Chicago Lawn. With $153 million in federal grants, he expects to buy, rehab and resell more than 1,200 units through the program, which was set up in 2008 to prevent further decline in areas crippled by the housing crisis.

“It’s a short-term solution for a long-term problem,” says Mr. Towns, 36. “What we have to do is continue to be creative about ways to tackle the situation.”

Mr. Towns oversees the local stabilization program as vice-president of community action plans at Mercy Portfolio Services Inc., a subsidiary of Denver-based non-profit Mercy Housing Inc. The federal government created the $4-billion initiative in 2008, and Congress included another $2 billion in NSP funding in the economic stimulus package last year.

So, the federal government created an artificial bubble in real estate, and now it gives $153 million to someone politically connected to sop up supply. Your tax dollars at work!