A New Way To Save Housing? Let The Rich Profit From Poor Homeowners

Could the government create a better housing rescue? Some people say it should try, and their favorite idea is “shared appreciation”—wherein rich investors profit from the travails of the poor.

The idea of the government helping transfer wealth from the poor to the rich may strike you as unseemly. But before you dismiss it, give it a listen. (And remember that by “the rich” we’re talking about anybody with money to invest. That could mean a member of the Forbes 400 but it could also be a pension fund for teachers or even a non-profit group set up by concerned neighbors.)

I’ve been interested in this idea of helping homeowners with equity infusions for a long while. Some bright people steeped in the economics of the housing market, including Michael Feder of housing-data analytics firm Radar Logic, have been lobbying officials at the U.S. Treasury to consider shared-appreciation programs. There’s been a fair amount of action in Congress on it, from both sides of the aisle. The big Frank-Dodd financial reform package passed this year contained language commanding the government to study shared-appreciation arrangements as a solution for the country’s housing ills. And on Wednesday Representative Gary Miller, a Republican from California, introduced H.R. 6256, “the Strengthening FHA Through Shared Equity Homeownership Act of 2010.”

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