City Hall Preparing To Nuke L.A. Real Estate Market

City Hall Preparing To Nuke L.A. Real Estate Market By Walter Moore, Candidate for Mayor of Los Angeles, WalterMooreForMayor.com November 23, 2008 You think it's hard to get financing for a house now? Just wait until word spreads about City Hall's latest plan to take away property rights without any compensation, much less "just compensation." On Friday, November 21, 2008, City Council passed Council Member Garcetti's motion to instruct the City Attorney to draft an ordinance to ensure "all tenants in foreclosed rental properties are protected from eviction by lenders." The City Council plans to pass a new ordinance "to restrict evictions of tenants in all foreclosed rental properties to be subject to the City's Rent Stabilization Ordinance." That's right: if the owner of the building stops paying his loan, and the bank forecloses, the bank will not be able to evict the tenants, and will instead be stuck with whatever rent they're paying. Let me give you a hypothetical example of why this is an absolutely terrible idea: Let's say you and I are next-door neighbors, who own comparable houses, and we each have a mortgage. We'd love to keep living there without having to pay the mortgage each month, and, while we're at it, we'd love to stay without having to pay property taxes, insurance or any other of the burdens of home ownership. Hey, "free" housing would be great, wouldn't it? So we make a deal: I agree in writing to rent my house to you for a $1 per year for 10 years -- you know, like the deal City Hall gave Aztecs Rising -- and you likewise agree in writing to rent your house to me for $1 per year for 10 years. We move into each other's homes, and we stop paying our mortgages. The banks foreclose, but thanks to the "generosity" of City Hall, the banks cannot evict us. We are tenants. Our rent is now "stabilized." So the bank gets stuck with the property taxes and maintenance, and cannot recover any portion of its principal. After all, who wants to buy a building with a tenant who pays just $1 per year in rent? By adopting this proposed law, City Hall would make it absolutely impossible to get financing to buy a home in our city. Who would want to lend money for a residential property if the buyer can simply rent it out, walk away, and leave the lender stuck with tenants whose rent may or may not be profitable? Furthermore, even if the City tries to avoid the particular problem I've identified by, say, setting up a bureaucracy to determine whether a rental agreement was made in good faith, why would lenders and buyers want the hassle of having to "prove" whether a rental agreement was "fair." Garcetti's proposal -- and the City Council's groupthink adoption thereof -- illustrate why it is absolutely vital that you support my campaign to become L.A.'s next Mayor. These people have no clue about the ramifications of their casual decisions to take away property rights that have been part of our legal system for centuries. The "solution" they are drafting up right now would create far worse problems by making it impossible for people get home loans. Unless you could pay all cash for a home, you'd be out of luck. City Hall would then have to come up with a "solution" for the financial crisis they created, which would doubtless involve higher taxes for you and me, and subsidies for their billionaire developer patrons to build more "affordable housing." Fight back! Send for a "Walter Moore For Mayor" yard sign and a bumper sticker today -- while you can still afford a yard and a bumper. Click here to fight back.