The St Louis Contrarian

Providing Independent and Intelligent Insight on St. Louis Public Policy Issues

Green lining

Greenlining is a nonsensical idea that is trendy with urban hipsters. The idea behind the program is to provide a mortgage fund that will fund the gap between the repair costs and the appraised value in an underserved neighborhood. An example:

Purchase price of house-$30000

Repairs-$70000

Other costs. $10000

Money needed to break even-$110,000

Appraised value-$70000

The green line program would fund the difference between $110,000, and $70,000 ($40,000) with a second mortgage. The first lender would be held harmless against any losses.

The problem with the program is that the buyer of the property is immediately underwater. Also who would invest in these mortgages when the chances of getting your money back is so slim in the short run. It is ironic to me that housing advocates would urge buyers to buy underwater properties. Written by Paul Dribin

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