Thursday, December 3, 2009

Chafing at Charity

This time of year I find myself thinking a lot about needs versus wants. Two things set me on this train of thought. The first, was the FHA loan limit for the Sac Metro area, and the second, a wish list item for a needy family. Let me make a couple observations before I get back to this.

In theory there are very few basic needs for someone living in a developed country: nutritious food, clothing, clean water, shelter, electricity (for heating and cooling), transportation to and from a job.

There are also many additional things that are considered basic needs by most Americans, but which I classify as wants: cell phones, TVs, name brand clothing and shoes, ipods, sushi etc.

So back to the housing related theory, the FHA is supposed to help folks of moderate means secure a loan to buy a home. So I was pretty stunned to learn that the FHA limit for the Sac Metro area is $580,000 (according to my google query). A loan of that size gives you access to over 90% of single family homes in the Sacramento area. A family of modest means should not be purchasing a home for almost 600k. The whole FHA thing has gotten way out of control.

As to the second item, call me a Grinch, but I recently received the wish list of an "Adopt-a-family" through my moms group, and I was really surprised. It had items like "gift card for ipod", and matching bedding set. These are items my kids don't even have.....since when does a kid from a truly needy family have an ipod?

Are my ideas of basic needs to stringent, am I being too judgemental? When I first moved to Sacramento after college, I ate ramen noodles, had a bike, a bean bag, a small radio, a microwave, and slept on a futon. I made due on my $10 hr job at a non-profit, and even managed to save some money for graduate school.

As many of you all know, I'm a bleeding heart, but using taxpayer money to subsidize a loan for a $580,000 home in the Sacramento area, and buying ipod gift cards is a stretch, even for my sense of charity.


patient renter said...

I'm with you on all points.

The FHA thing is beyond out of control. Their mission is to expand homeownership. The part about whether burdening a family with half a million dollars (or more) of debt for a potentially inflated asset is a good thing isn't mentioned in the mission, nor is it mentioned that the mechanism for achieving their goals (subsidies) actually harms their mission by making homeownership less achievable for others.

If ever there was a perfect example of counterintuitive, counterproductive government, the FHA is it.

mcb44 said...

I'm right with you on both items.

Deflationary Jane said...

yep, I'm right there with you on both items.

The gift card for an ipod which would just as likely be turned into just cash? I don't think so.

And FHA? Hmmm people making over 100k need help buying houses? Kinda makes my brain explode.

2cents said...

Great post, BT.

US taxpayers will be bailing out FHA soon.

husmanen said...

I concurr on both points.

My wife participates in Sierra Moms and we donate presents to kids in need, could be the same thng. Anyway, we have had the same request for two years in a row - backpacks. That is a very useful gift, especially for a child that may be moving around a bit. Actually, we often get siblings that need the backpacks.

FHA is the new subprime and will come to bite us in the near future.

Buying Time said...

Shopping for a teenager isn't easy. But there must be a middle ground somewhere....above socks and underwear, but below video games and electronics.

Trying to find something a kid genuinely wants (the magic of X-mas type of thing), but that still fills a need is tough...a backpack certainly fits that bill.

radiophilejapan said...

I agree fully with the OP and all the comments. FHA seems indeed to be a time bomb. Not to mention the unfair distribution of income it drives.
In a consumer society like ours it is difficult to resist to the allure of nice gadgets or brandname outfits at the expense of more basic needs, leading to incongruences like this.

Sold in '05- Bought in '09 said...

The FHA limits were a "temporary" extension. Congress has to re-up this every year. They appear to have recently passed the extension through 2010.


Giacomo said...

Yes, agreed, especially about the FHA.

If I see a theme here: the problem is with the nature of middlemen (and associated bureaucracies). The FHA lends someone else's money to third parties (in pursuit of a political agenda). Likewise, so many "charity" groups want to collect YOUR money and then decide for you how to distribute it.
No wonder there is so much waste, and so many bad decisions -- what are the consequences when it's not their money?

I was a visitor at a local Lodge meeting recently. They had just had a fundraiser for Make A Wish; they pocketed 50% of the event proceeds -- WTH!? How much better if the donors had just given directly.

This year we're just walking into the local food bank with a donation. I'm not sure what kids want, but I know they have to eat.

PeonInChief said...

I agree with the first, and disagree with the second, although what the FHA limit really means is that the federal government is now insuring almost all the mortgages in the country. We can only hope that they don't screw up as badly as the private sector did.

If I were a poor kid, I sure wouldn't want to ask for a backpack. I'd want a gift card for an ipod (and I'd probably spend it on same). What I wouldn't want is for the kid to ask for something that s/he thought was "acceptable" to the middle class people buying the gift.

patient renter said...

"acceptable" to the middle class people buying the gift

That's an interesting point, why not give the kid what they want?

In a low income area where a friend works as a teacher many of the families have an odd set of priorities - ex: giant flatscreen in the living room wired with makeshift electrical, donated food in the cupboard, cellphones for every member of the household, broken plumbing in the bathroom. I've never been sure what to make of it.

Bryan said...

Hey it's Christmas! Time for wishing and merriment. I figure, I'm not here to set people's lives in order. I'm just lining up to make a couple kids' wishes come true at Christmas, if feasible for me. If they want an ipod, and I can afford it and want to give it, then fine. It makes me happy. Merry Christmas!

Having said that, the gov't shouldn't be in the same wish-fulfillment business, so I'm obviously with you on the FHA thing.

sacramentia said...

I agree with all of your points and think giving should be an individual decision.

I really don't like the government deciding how to give money away in various programs like the FHA loans. I'd actually be happier if there was no limit -or- no program at all.

Jeff T said...

What if the wish for a gift certificate for an iPod was an act of altruism and the gift would be used to give to someone else?

Having been on both ends of the economic spectrum Christmas can be both a blessing and a disappointment.

Give what you feel is appropriate but judgement comes from a higher power. God bless for any and all that is given.

Cristine said...

great post... I agree on both points.