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We need a ‘Cash for Clunkers’ program for houses

We used to be able to take for granted that our neighbors would be our neighbors indefinitely — whether we knew them well or not. You get used to seeing the same familiar faces. You gather bits of their stories.

We used to be able to take for granted that our neighbors would be our neighbors indefinitely — whether we knew them well or not. You get used to seeing the same familiar faces. You gather bits of their stories. And so it was with a woman who lived in my South Minneapolis neighborhood.

Her house’s brick exterior was crumbling, but the leaded glass door, its statuesque exterior design and the gardener’s house next door hinted of its grand beginnings. The woman who lived there was a self-proclaimed scavenger, driving down city alleys looking for treasures.

She had a big rummage sale last fall. I stopped by, more to see the house than to see the rummage. Despite its disheveled appearance, I was impressed by the home’s grand staircase and the wood box ceilings in the living room and dining room. Thanks to her scavenging, the woman had more than the usual amount of beautiful junk. I bought some crystal salad plates, milky with age, graceful etchings along their borders. I think about her every time I use them.

There were rumors during the rummage sale that the house would soon be for sale. She was the sort of neighbor who’s in more jeopardy than others in this cruel economy. Weeks after the sale, piles of left-over treasures remained, and the sense of overwhelm was almost palpable — drifting in waves from the house. Sometimes, when I walked by on dark winter evenings, the only light I saw was candlelight. I hadn’t seen any smoke from the chimney for a long time. I worried — did she have electricity? Did she have heat?

What if we simply walk away from our homes?
All of us have neighbors who may not make it in the new economy — those who were just getting by during the good times. A job loss, rise in taxes or the credit crunch are enough to send many families over the edge — from stretched but stable to no longer able to hang on.

The first rounds of foreclosures have taken many of us by surprise. But who among us doesn’t fear that it could happen to us? As equity in houses erodes, more and more formerly stable middle and upper-middle class people are discussing in whispers the possibility of walking away from their homes.

What incentives are there to keep paying for homes that are no longer worth as much as their mortgages? Our government leaders must come up with a program to stabilize the properties that are worth less than their mortgages — or we are going to see more and more neighborhoods throughout the country dotted with vacant homes, generating no property taxes.

Certainly people whose homes are worth less than their mortgages need to bear some of the burden. But mortgage companies and public officials are culpable as well. As mortgage companies and banks are slowly learning, receiving part of a mortgage is far better than none.

Mortgages should be readjusted
Currently, there are 200 homes in foreclosure listed in the Twin Cities — half of them are over $300,000 in value — probably deeply discounted from a few years ago.

We must let our federal representatives know that we expect mortgage holders to renegotiate mortgages based on the new economic reality. If a home was worth $500,000 and is now worth $400,000, its mortgage should be adjusted accordingly. And in the spirit of Cash for Clunkers, the government can show its support of homeowners by providing tax rebates for those who’ve lost more than 10 percent equity in their homes.

My former neighbor’s house was marketed for one day before it was bought by a developer who promises to restore it to its former glory. The neighbors are hopeful that the house will see better days, but what of its long-time occupant?

The truth is we can no longer take our neighbors or their security in their homes for granted — especially when most of us are a paycheck away from falling behind on our mortgages.

Lynn Ingrid Nelson is a public relations consultant and University of Minnesota instructor living in South Minneapolis. She can be reached at