Megan McArdle

[Magda Hassan]

Mortgage Bailout Infuriates Tenants (And Steve Forbes)

'Angry Renter' Web Site Has Grass-Roots Look, But This Turf Is Fake

• By MICHAEL M. PHILLIPS
  

WASHINGTON -- AngryRenter.com looks a bit like a digital ransom note, with irregular fonts, exclamation points and big red arrows -- all emphasizing prudent renters' outrage over a proposed government bailout for irresponsible homeowners.
"It seems like America's renters may NEVER be able to afford a home," AngryRenter.com laments. The Web site urges like-minded tenants to let Congress feel their fury by signing an online petition. "We are millions of renters standing up for our rights!"
Angry they may be, but the people behind AngryRenter.com are certainly not renters. Though it purports to be a spontaneous uprising, AngryRenter.com is actually a product of an inside-the-Beltway conservative advocacy organization led by Dick Armey, the former House majority leader, and publishing magnate Steve Forbes, a fellow Republican. It's a fake grass-roots effort -- what politicos call an AstroTurf campaign -- that provides a window into the sleight-of-hand ways of Washington.



The housing crisis has sparked broad financial and economic distress. The House of Representatives responded last week by passing a bill that would provide up to $300 billion in federal insurance to help refinance troubled mortgages. President Bush has threatened to veto it, calling the measure a reward for speculators. On Thursday, key Senate Democrats and Republicans reached an agreement in principle on a compromise housing-rescue bill.
This week, officials from FreedomWorks, the organization behind the site, delivered to Senate leaders antibailout petitions signed by 44,500 people who clicked their agreement on AngryRenter.com, at least some of whom thought its grass was real.
AngryRenter.com does get to the center of the housing debate: Who deserves help and who pays for it? The average U.S. home price fell 12.5% between the second quarter of 2006 and the first quarter of 2008, according to Fiserv Inc.'s Case-Shiller Home Price Index and Moody's Economy.com. Prices are projected to fall another 12.5% by the second quarter of 2009, before they rise again, Economy.com forecasts.
As interest rates on some mortgages rise, many homeowners are unable to make their payments or refinance into cheaper loans. An estimated 2.5 million Americans are expected to lose their homes between this year and next, more than twice the pace during normal times, according to Economy.com.

• AngryRenter.com
  
• FreedomWorks
  

FreedomWorks officials say the current housing bill is just the beginning of what could be an onslaught of election-year bailout legislation. By providing relief to mortgage holders, the site argues, the government will prop up housing prices and reward people who borrowed more than they could afford to buy more house than they needed. That will continue to freeze out renters who were sidelined as home costs soared.
"We are the class that has been ignored in this debate," the site says.

Heavy Dose of Innocence

FreedomWorks puts its copyright on AngryRenter.com and discloses on the back pages that it is the source of the effort. The site is nonetheless designed to look underdoggy and grass-rootsy, with a heavy dose of aw-shucks innocence.
"Unfortunately, renters aren't as good at politics as the small minority of homeowners (and their bankers) who are in trouble," the site says. "We don't have lobbyists in Washington, DC. We don't get a tax deduction for our rent and we don't get sweetheart government loans."
FreedomWorks and its affiliated foundation took in $10.5 million in revenue in 2006, the last year for which filing data are available. Much of the income came from large donors the group declines to identify. A spokesman described the secrecy as "standard D.C. practice."
FreedomWorks President Matthew Kibbe, a former top aide to a Republican lawmaker, says the site is an effort to "reach out" to renters who share the free-market views of Messrs. Armey, Forbes and others. Mr. Kibbe owns his own home on Capitol Hill in Washington, valued by local tax authorities at $1.17 million. "I'm an angry homeowner who pays his mortgage," Mr. Kibbe says.



Mr. Forbes -- the chairman and chief executive of Forbes, a former Republican presidential candidate and an unpaid FreedomWorks board member -- owns a 7,966-square-foot house on 9.5 acres in Bedminster, N.J., assessed by county tax authorities at $2.78 million. He owns 111.8 more acres next door, registered as farmland and assessed for tax purposes at $45,500. The county lists at least half a dozen other Forbes properties in the area. The Forbes family has sold off its private island in Fiji and palace in Morocco, but still owns a château in France.
Mr. Forbes didn't respond to repeated interview requests through his spokeswoman.
Mr. Armey, FreedomWorks's chairman, left Congress in 2003 and now lobbies his former colleagues as a senior policy adviser at DLA Piper, an international law and lobbying firm. He earns $100,833 a year for four hours a week working for FreedomWorks Inc., the organization's advocacy arm, and an additional $403,333 for 32 hours a week working for FreedomWorks Foundation, its tax-deductible, educational wing, according to federal tax filings.
Mr. Armey owns a house on 78.5 acres in Denton County, Texas, north of Dallas. In response to a public-information request, local authorities revealed that the land and house are worth a combined $1.7 million.
Rep. Barney Frank, chairman of the Financial Services Committee and author of the housing bill that passed the House last week, says he finds it amusing that Mr. Armey is portraying himself as a champion of the tenant class. "I worked a long time trying to improve the condition of renters," says the Massachusetts Democrat. "Dick Armey has usually been on the other side."

'Bad Judgment'

Mr. Armey says he's looking out for "the poor devil" who can't afford to buy a house. "From our point of view, we have an industry in which people were very careless, very reckless -- both lenders and borrowers," says Mr. Armey. "What various policy makers are saying is we need to rush in here with a program to protect people from the consequences of their own bad judgment."
As for the site's grass-roots facade, he says, "It's a wholly voluntary thing -- you can either sign up for it or not."
AngryRenter.com does seem to be tapping a vein of genuine public ire. Rich Toscano, a renter who is a financial adviser with Pacific Capital Associates in San Diego, initially thought the site was an authentic, popular enterprise. "It looks like a young person did it," he says.
He was instinctively sympathetic, having started his own blog: Professor Piggington's Econo-Almanac for the Landed Poor, a celebration of foreclosures and other misfortunes suffered by real-estate brokers who he says helped inflate the local bubble. Though Mr. Toscano realized later that FreedomWorks was behind AngryRenter.com, he says the message is more important than the identity of the messenger. Everyone should be angry about any bailout, he says.
Among the renters who work at FreedomWorks is Chris Kinnan, who designed the site. He says he's not in the market to buy a house. "I'm a renter," he says. "I'm not an angry renter."
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