http://www.shelterforce.com/ The journal of affordable housing and community building en Copyright 2012 2012-05-14T07:23:09+00:00 http://www.nhi.org/article/2686/new_consolidated_plan_better_supports_community_investment_decisions/ http://www.nhi.org/article/new_consolidated_plan_better_supports_community_investment_decisions/new_consolidated_plan_better_supports_community_investment_decisions/#When:06:23:09Z HUD has announced the eCon Planning Suite, new tools for the Consolidated Plan to support need-driven, place-based decision-making that will engage informed public participation and improve community and economic development outcomes. These new tools will make expanded data available online for anyone to access through CPD Maps, a sophisticated and easy-to-use mapping tool to help interpret the data. In addition, HUD has created an online template for the Consolidated Plan, which will help facilitate place-based discussions and make all local and state plans available online. HUD anticipates that these resources will make it easier for community members to participate in the decision-making process. These tools will help communities target resources and improve community outcomes, provide a framework to guide other funding coming into communities from foundations and other sources, build a library of local strategies and best practices, empower more informed community participation, and ultimately provide better information about the effectiveness of these local efforts. The Challenge Communities receiving HUD block grant funding face diminishing resources to address community needs and comply with grant regulations. In 2012 there 1,250 grantees are subject to Con Plan requirements, and since 2008 the number of grantees has increased while overall funding has declined. Because of limited information about market conditions and lack of useful tools, HUD’s review of Consolidated Plans has focused on whether the plans met regulatory requirements. Now, HUD seeks to shift this focus to need-driven planning and decision-making that results in decent housing, a suitable living environment, and expanded economic opportunities for low- and moderate-income persons. HUD understands that—in addition to ensuring compliance—its role is to support communities in their efforts to design data-driven strategies to address fundamental affordable housing and community development problems. 2012-05-14T06:23:09+00:00 http://www.nhi.org/article/2673/shelterforce_interview_sen_robert_menendez/ http://www.nhi.org/article/shelterforce_interview_sen_robert_menendez/shelterforce_interview_sen_robert_menendez/#When:05:29:58Z Shelterforce: You have long been a supporter of the idea that the GSEs should conduct principal reduction for underwater and at-risk homeowners to keep more people in their home and actually reduce the loss to the taxpayer. But as you know, of course, FHFA has been really resistant to that, and that’s been coming to the fore lately, and it’s gotten sort of political. How do you see a path forward toward moving principal reduction along in the current environment? Sen. Robert Menendez: I think we need to keep the heat on to make that happen and one of the things that we have to deal with is the regulatory process, how banks get treated if they do the principal reductions that we want them to do, and how the reduction takes place. I also introduced a bill in February to make shared appreciation mortgages more globally available. This is where the loan is written down to 95 percent of loan to ratio value and where, in return, the lender, for reducing that amount of the original loan, will get a percentage of any increase in appreciation. So it incentivizes them to write down the loan now when people desperately need it and take the risk. There might be appreciation, there might not be appreciation. But if there is, they’re going to get part of it in return for the principal amount that they reduced. So I think we need to do a series of things, both on the regulatory side, on the incentive side, and to continue to push. We’re also waiting to see how the attorney’s general settlement with the country’s largest mortgage servicers plays out because lot of that money will go to principal reduction. While there are many people who believe that the settlement was insufficient, we look forward to seeing a scenario where that money could be used for loan reduction. We recently did an interview with the CEO of Ocwen, and they’re carrying out a shared appreciation mortgage program that’s similar to yours. Do you see the fact that a private vendor is engaging in this as something that might help make the GSEs more comfortable with it? I think so. Ocwen was actually the genesis of some of this idea. Of course, they’re doing it in the private sector within a limited universe. I want to dramatically expand that universe. It seems to me that the GSEs would look at it and be able to say, “Well, we still have an opportunity to recuperate a significant amount of principal” at the end of the day by having a percentage of future appreciation recaptured, and therefore strengthen their portfolio. My argument to the GSEs and the conservator, who I think has had a very narrow view of conservatorship, is that when a house forecloses, how much don’t you lose. And if you’re going to take that write-down, then why not take a write-down that, at the end of the day, keeps families in their homes? Exactly. You mentioned potential regulatory help in terms of the principal write-down. Do you have specific ideas in mind of things that would help move that forward? Part of the challenge for the banks is that, if they write down significantly large parts of their portfolio in the mortgage market, their rating with the regulators is affected. And so it’s almost like “Let me keep the property on the books because for so long as I keep the property on the books, I can have it at the value that I lent at or it was appraised at.” First of all, that’s unrealistic because, obviously, values have changed. Second, it’s unrealistic for the regulators to insist that they recapitalize to the extent that they go ahead and make principal reductions, when, in fact, we all know that those would be write-downs anyhow. So finding the right balance as to how do we allow the principal reductions to take place, but not penalize the banks for doing so is the access that I’m trying to find, that intersection that accomplishes both of those goals. It seems to me that it’ll have to have some regulatory review that says that a certain percent of overall write-down does not trigger a recapitalization, because otherwise the bank not only wouldn’t take its losses, but that it would also have to seek new capital just to be in the present status position they’re in. That’s not exactly an incentive for them. Do you think the special mortgage investigation unit headed up by New York State AG Eric Schneiderman could quell some of the concerns that the AG settlement didn’t go far enough? In what way would you like to see it have an impact? The president’s effort is to ensure that those who violated the existing law get prosecuted and I think this would send a clear message to the marketplace. Shouldn’t this have happened sooner? Should it have been done earlier? Yes. I mean, I certainly would have liked to have seen it done earlier. I think the administration was totally consumed with dealing with the consequences of what happened more so than the causes in the first instance, but I’m glad that the president ultimately got to it. Will this tie in in any way with the OCC’s foreclosure review program that you’ve supported recently? I really don’t know for sure, but I think this unit has a lot more to do with the securitization aspect of what transpired and some of the mortgage products that transpired, but I’m not sure how far it goes beyond that or how it’s going to interface. Policies, Housing Policy Interview Series 2012-05-03T05:29:58+00:00 http://www.nhi.org/article/2581/ron_faris_ocwen_ceo/ http://www.nhi.org/article/ron_faris_ocwen_ceo/ron_faris_ocwen_ceo/#When:18:45:03Z Housing counselors and advocates have been insisting for years that principal reduction is the only way to sustainable loan modifications and neighborhood stabilization—and that it is better for investors too. Their points have largely fallen on deaf ears. So when Ocwen Financial, a leading, and fast-growing, servicer of subprime loans introduced an ambitious principal reduction program last year, we took notice. Please tell me a little bit about yourself and your experience at Ocwen. [Before Ocwen] I worked for about five years at a Wall Street company that’s no longer around, Kidder Peabody, and was owned by GE at the time. That’s where I got my introduction to the mortgage business. I joined Ocwen in 1991, and my first role was as the controller for a mortgage insurance company that Ocwen owned at the time. What a mortgage insurance company does is, obviously, writing policies to insure losses. If a loan does go into default, the first loss is going to go to the insurer. So the insurer has a vested interest in making sure there are quality workout solutions to minimize losses. When I joined in ‘91, Ocwen basically had two businesses. We had the mortgage insurance company, which had stopped writing new policies but was still receiving premium income from existing policies and managing its claims process, and took an active role in managing and working with servicers to more effectively deal with delinquencies. The other piece of our business was a bank the form of a Thrift, and that Thrift got involved with buying subperforming and nonperforming mortgage loans from the RTC, which again was all about how do you more effectively find workout solutions for borrowers and minimize the loss on your investment. So back then the losses were ours, whether it was on the insurance company side or on the assets that we owned in the Thrift. We learned pretty quickly that we lost a lot more money if we ended up going all the way through to foreclosure than we did if we were able to find a way to keep the homeowner in the home and get them paying again. And that really became the basis for how we approached loss mitigation. Our business progressed to where we were a pretty large buyer of nonperforming mortgage loans from the RTC and then from banks and others. But as we got towards 1996, 1997, 1998, the company actually went from a private company to a public company, and—although it pales in comparison to today—there was also in ‘98, ‘99 a credit crisis that caused some problems for smaller, mid-sized finance companies. We weathered that storm quite well, but a lot of others didn’t. [But we] changed our business model and decided we would no longer buy assets for our own account, but we would instead just service assets for other parties who either wanted to invest in loans or already had an investment and needed help with their delinquent loans. We had a very robust platform that we were under-utilizing, and also we found that the banks, and especially the larger banks, had a much lower cost of capital and could buy assets and finance them cheaper. So we said, “Well, we’ll never beat them on the capital side, but we can probably always beat them on the servicing and special servicing side, so why don’t we just go out to them and say, ‘Look, you’re good at raising low-cost capital and we’re good at servicing loans and minimizing losses. Why don’t we combine forces?’” Now, as it turned out, probably the place—at least in the early to mid 2000s—where that model seemed to fit best was actually as a result of the boom in the subprime market. As the amount of subprime loans increased, and as Wall Street in particular got more involved with it, there was a much larger demand for servicers who could handle pools of loans that had a lot of delinquencies in them, and so that became a prime focus of ours throughout most of the 2000s. You must have seen the future clearly by 2004. Well, I should really compliment people like Mark Seifert of ESOP and others in the consumer advocacy world, who saw it long before industry saw it. I can remember sitting down with various advocacy groups and them talking about the struggles families were having and how the subprime market was a big part of the problem and, in their view, not a sustainable model. I remember—I think it actually was in Cleveland, ESOP taking me around and showing me—walking down a street and saying, well, here’s a house on one side that’s really well kept, really nice. Here’s a house on the other side that actually at one time Ocwen foreclosed on. They sold the real estate to an investor who got a subprime loan from Ameriquest and within nine months went delinquent again, and the home was back sitting on the street in foreclosure in relative disrepair. It was very clear, when you saw it firsthand, how that was affecting not just that one isolated house but the houses all around it. So I think I got a lot of my education in what was to come from some of the advocacy groups who were showing me what was really happening in the neighborhood. For us, though … we were not an originator. We were not an investor in the loan. So there wasn’t a lot that we had to change besides just making sure that we were prepared for the increase in delinquencies that had started and was likely to continue. By no means is it a good thing what’s happened. But for Ocwen, our business model was actually more prepared for where the world has gone than I’d say most other servicers, which obviously on the larger scale is unfortunate, but it did require greater demand for our services. Now, there was a short period where demand dried up because there was no longer a subprime business, so there was no new business coming in. But you’ve seen over the last few years, players looking to exit that legacy business and we now have the opportunity to consolidate what’s left and grow the number of accounts that we’re managing. You just purchased the servicing rights to a number loans, such as the Litton portfolio from Goldman Sachs and part of the Chase portfolio. Right, as well as the entire HomEq portfolio and servicing platform that was owned by Barclays. We purchased that in 2010. And we recently announced our purchase of Saxon Mortgage from Morgan Stanley, which we anticipate closing in this quarter. These deals are available mostly because those companies—Barclays, Goldman Sachs, Morgan Stanley—are looking to exit the mortgage servicing business altogether. In the case of Chase, I think they determined that there may be certain portions of their portfolio that either were not core and were more suitable for somebody set up like we are. You said that you figured out early on that you lost a lot more money going to foreclosure than doing a good workout. No doubt you’ve heard from Mark and other advocates how hard it’s been to convince banks and servicers that that’s the case. How do you account for the resistance in the rest of the mortgage industry? I think it was largely because a lot of the mortgage industry was focused on the origination side of the business, was not out there seeing what was really going on in neighborhoods. But being a subprime servicer, we serviced loans that were originated by New Century, by Ameriquest, by Option One, by Accredited, all of the originators out there. Even though some of them had their own servicing operation, we ended up with loans from all of them because they sold to Wall Street and Wall Street would hire us to do the servicing. So we had a good cross-section of what was going on throughout the industry. And again, I don’t want to overstate that I—or anyone at Ocwen—was fully able to predict what was happening out there. The difference for us was we didn’t own any of the risk and our job was to service the loans. If they went delinquent, then that’s when we were at our best in working with customers. We just kept doing what we were doing. We were just doing more and more of it. Policies, Housing Policy Interview Series 2012-04-24T18:45:03+00:00 http://www.nhi.org/article/2635/stabilizing_urban_neighborhoods_qa_with_elyse_cherry/ http://www.nhi.org/article/stabilizing_urban_neighborhoods_qa_with_elyse_cherry/stabilizing_urban_neighborhoods_qa_with_elyse_cherry/#When:18:43:03Z Boston Community Capital’s Stabilizing Urban Neighborhoods (SUN) program started with a goal in mind, not a method. That goal was to keep homeowners who are referred to the program actually in their homes, as long as they could afford a mortgage at the house’s current market value. The SUN program is open to trying a range of possible ways of doing that—from buying the mortgage and modifying it (see p 12) to acquiring the home through short sale or at an auction as occupied REO and selling it back to the borrower. But since the program launched in 2009, BCC director Elyse Cherry says servicers have been reluctant to sell individual notes at an appropriate write-down for fear auditors will then make them write down the rest of the portfolio as well, so note purchases haven’t worked. Short sales too have been hard to come by; SUN has only pulled off only 11. Given this, and SUN’s working relationships with foreclosure counselors, community groups, and organizing groups like City Life/Vida Urbana (see The Sword and the Shield SF, Fall 2011), purchasing occupied post-foreclosure houses has become SUN’s signature, if unexpected, method. The basic strategy is to negotiate a discounted or “distressed” price from the servicer, give it a 25 percent markup to cover a loan loss reserve, and sell the home back to the owner at approximately current market value. A shared-appreciation second mortgage splits appreciation based on the ratio of the new mortgage to the old one (if the new mortgage is 70 percent of the old mortgage, the homeowner gets 70 percent of the appreciation). Cherry says this move is to keep out speculators. SUN has prevented the eviction of over 175 Massachusetts households in 100 properties—and reduced average monthly housing payments of the owners by more than 40 percent. There has been a lot of media attention on its unique approach, though its scale is small. Shelterforce asked Cherry about some of the concerns the program raises in the field, and about getting to scale. To many housing advocates, a 25 percent markup with no enhancement to the property would sound like flipping. I am concerned about the 25 percent markup. You could say we’re flipping, but if someone has figured out how to do this without a loan loss reserve, I’d like to know. We need a responsible product. Everyone we are lending to is completely unfinanceable in the current market. We’re not in the business of stripping neighborhood equity. Should there be any value [to us from the shared-appreciation mortgage or otherwise], one way or another it will go back into the neighborhood. What’s the redefault rate? When we modeled it, we modeled 15 percent. I don’t think we’re going to be anywhere near that. We have one person we may have to foreclose on. I think in the end we’re going to be below 5 percent. 2012-04-24T18:43:03+00:00 http://www.nhi.org/article/2639/the_hard_part/ http://www.nhi.org/article/the_hard_part/the_hard_part/#When:18:42:01Z As important as dealing with delinquent mortgages preforeclosure is, neighborhood stabilization also requires dealing with the fact that the horse is already out of the barn. Neighborhoods are flooded with vacant properties, many of which are foreclosed, and some of which are REO (real estate owned, i.e. lender/investor owned). From the beginning, of course, nonprofits and mission-oriented for-profits have been attempting to get control of these properties, rehab them, and get them reoccupied in order to stabilize the neighborhoods they pock-mark. Three rounds of NSP funding have been distributed through local governments and collaborative efforts with nonprofits to mission-oriented developers. Innovation has abounded despite frustration with restrictive regulations. Community developers have bit the bullet on targeting resources, challenged their own ideas about rehab levels and demolition, and brought their own strengths, combining neighborhood organizing, advocacy, and other quality of life programs to try to increase the ripple effects. But even the most exciting of these projects fall short of the scale that’s needed. Oliver Chang, a Morgan Stanley analyst based in San Francisco, put out a report last October that predicted that about 7.5 million homes with a current market value of $1 trillion will be liquidated through foreclosures or other distressed sales by 2016, according to Bloomberg News. “It was an eye-opener to hear HUD and some economists say we’ll only touch 1 percent of one year’s worth of foreclosure over the years of the NSP programs,” says Kate Krietor of the city of Phoenix’s NSP programs. “It’s daunting to think of it that way.” Carolyn Olson, president of Minneapolis’s Greater Metropolitan Housing Corporation, says they bought about 300 foreclosures through the First Look program of the National Community Stabilization Trust, (NCST), clustered in North Minneapolis where the greatest need was. They sold about 50 of them back to the city (which demolished 35) or to nonprofits/responsible for-profits working with NSP money. They demolished 50 and renovated the rest directly into for-sale single family homes, and implemented a contract-for-deed program to deal with the credit issues facing potential buyers. They sold 25 in the first half of 2011, 47 in 2010, 85 in 2009. “It’s kind of a drop in the bucket,” says Olson. In Chicago, Mercy Portfolio Services, which administers the city’s NSP funds, has focused on using the funds for multifamily apartment buildings on key corners, because the bang for the buck is so much higher than with single-family homes. (See profile p 24.) Los Angeles’s NSP program has also gone after many key multifamily buildings. On the private side, some smaller REO purchasers have been fixing up properties for rental or lease-purchase, something likely to pick up as the GSEs explore bulk REO sales. So far, however, many more REO investors have either gotten in over their heads with decrepit properties that don’t pencil out or are intentionally speculating from afar, leaving many neighborhoods even worse off, and housing and neighborhood advocates skeptical of the entire idea of private investment in REO, especially in bulk (see “Tackling Bank Walkaways and Vulture Investors,” SF Fall/Winter 2010). The concept of addressing REO property at scale with private investment is a tricky one. It involves balancing efficiencies of scale with the ability to target investment and, as Eric Belsky of the Joint Center for Housing Studies puts it, “do no harm” despite the tenuous, fragile conditions of both properties and neighborhoods. It also involves questions of capacity—both financial capacity for swift acquisitions and development capacity to affordably turn around properties at a faster clip. 2012-04-24T18:42:01+00:00 http://www.nhi.org/article/2640/tackling_the_challenge_of_scattered-site_rentals/ http://www.nhi.org/article/tackling_the_challenge_of_scattered-site_rentals/tackling_the_challenge_of_scattered-site_rentals/#When:18:41:03Z Last fall, the Federal Housing Finance Agency sought comments on how Fannie Mae, Freddie Mac, and the Fair Housing Administration can divest themselves of their massive inventory of real-estate-owned properties. Among the ideas gaining traction is selling homes for rental rather than owner-occupancy, as in the GSEs’ recently rolled out REO to rental pilot project. A big REO auction could give community groups a shot at developing much-needed affordable rental housing, but they will face stiff competition from for-profit investors. If nonprofits are able to pick up properties, they’ll have another major challenge: managing scattered-site rental. While many nonprofit organizations now manage multi-family buildings, having single-family homes spread over a wide area is much more difficult, logistically. No Efficiencies of Scale All sorts of costs—from trash removal, to travel time and gas for maintenance crews—become much less efficient when the same number of rental units are spread around in many buildings across a wide geographic area. Ithaca Neighborhood Housing Services has been managing scattered-site rental housing since the early 1980s. Their stock ranges from five-family buildings to duplexes and one single-family home, and is mostly quite old. Sandy Conrad, a property manager at Ithaca NHS, notes that one of the issues with scattered site is “you’re going to have different types of fixtures within the same building, in different units.” That can make repairs more costly, because the maintenance staff has to either keep a huge inventory of different kinds of fixtures, or drive to get the necessary part every time. Unless you have the cash upfront to make a wholesale replacement of fixtures, this sort of piecemeal upgrading gets costly. Drive time turns out to be another overlooked cost of scattered-site management. Lori Neally is the director of Gilman Property Management, a subsidiary of Gilman Housing Trust in Lyndonville, Vt. The distance between her two most spread out properties is “a little over 100 miles—if it was a straight shot,” which, of course, it isn’t. The staff time and gas spent driving between houses gets expensive fast, she said. Distance also gets factored in to the costs of supplies. “It’s closer to go to the little mom-and-pop hardware store, but it may cost us five dollars more,” Neally said. “But it may save us money in gas,” she added, so she tries to find a balance. Along with repairs, regular maintenance doesn’t scale well either. Boston-based Chelsea Neighborhood Developers has 86 units in 18 buildings. This means that “rather than having one Dumpster for 86 units, or maybe two,” says David Keene, director of finance and operations, the maintenance crew has to drag out 18 sets of trashcans or Dumpsters every week. The same goes for snow shoveling: the maintenance crew has to go from building to building every time it snows. Laundry machines pose yet another problem. With only two or three families per building, the washing machine company doesn’t do enough business to cover costs, so the rents on the units have to subsidize the machines. While having the machines is an additional expense to factor in, “We feel that it’s important for our residents, particularly the ones who have families, as most of our residents do,” Keene said. Security is also much harder with an inventory of scattered-site one- to four-unit homes than a single development. “We buy a property, it’s secure, and then two days before closing someone goes in and steals all the copper,” says Keene. All of these mundane costs add up to scattered-site rental management costing about 25 or 30 percent more than traditional rental housing, estimates Ivan Levi of the Community Development Trust in New York City. It’s more expensive, and more unpredictable. The Flint, Michigan-based Genesee County Land Bank generally breaks even on its rental properties. “Last month we had about $30,000 in rental income, and about $27,000 in expenses,” says executive director Douglas Weiland. But, he adds, that breakdown can swing wildly if something goes wrong. “The expenses are irregular, because if on any one of these houses we have to replace a furnace, it’s a couple thousand dollars that’s not planned. If on any one of these houses we have to replace the roof, that’s a couple of thousand dollars that’s not planned.” With a large pool of scattered-site rentals, that’s many roofs and boilers that can break. 2012-04-24T18:41:03+00:00 http://www.nhi.org/article/2641/banking_on_neighborhood_stabilization/ http://www.nhi.org/article/banking_on_neighborhood_stabilization/banking_on_neighborhood_stabilization/#When:18:40:03Z A year ago, the Beach Street corridor of Flint, Mich. was pockmarked with 16 trash-filled vacant lots. Today, this two-acre area a mile south of downtown Flint has been consolidated into Flint River Farm, the city’s largest urban farm, replete with a passive solar hoop house for year-round growing, in what had previously been a blighted stretch of food desert. The two women who farm this land own three of the lots and lease the others from the Genesee County Land Bank . Neighbors have welcomed the endeavor—for its beauty, for the valuable food choices it offers the community, for the job prospects it has created, and for lending hope to residents who are toughing it out in one of the nation’s most famous Rust Belt cities. In the decade since Genesee County first took steps to create its nonprofit land bank, a growing number of municipalities, counties, and states have begun to embrace land banks as a tool to systematically address vacant and abandoned properties. A land bank is an entity, public or nonprofit, with the authority to acquire vacant or distressed property, clear title and taxes, and assemble it, redeploy it, or maintain it in strategic ways, rather than based on the short-term highest bid. Land banks offer public agencies a number of robust options to undercut dynamics in the real estate market that often foment, rather than avert, urban blight. This can deliver real benefits, even in what are arguably the most challenging housing and economic environments this nation has confronted in decades. Properties that are too deteriorated, low-value, or constrained by title problems to be feasibly preserved or rehabbed either by the market, partnerships, or even subsidized nonprofit programs can often be turned into assets, or at least less actively negative influences, by the intervention of a land bank. 2012-04-24T18:40:03+00:00 http://www.nhi.org/article/2646/relaxing_the_credit_crunch/ http://www.nhi.org/article/relaxing_the_credit_crunch/relaxing_the_credit_crunch/#When:18:39:03Z Before Ginger Hitzke was the president of her own Hitzke Development Company, she was frustrated in her efforts to get mortgage credit. Not because her credit history was bad, but because her financial history didn’t necessarily lend itself to a traditional credit history. “When I was a younger person trying to get a loan for the first time,” she says, “I spent money on things like utilities, rent, food, and the babysitter—things that don’t get reflected in a credit score.” By the time she had a credit history developed enough to qualify for lending programs that target underserved communities, her income had grown to the point where she was no longer considered part of that community. If Hitzke struggled just from being young, imagine how much harder it would be for someone whose credit record is blemished by a foreclosure, medical debt, or job loss, and who might live in an area or belong to a demographic that already experiences credit discrimination. And yet, with the backlash to the housing crisis among lenders, and the effects of that crisis and rising unemployment on households’ finances, mortgage credit is becoming harder and harder to get just when neighborhoods desperately need new homeowners to step in and fill up their vacant properties. As the mortgage industry tries to recover from the housing crash and deal with piles of toxic debts on its books, the more stringent lending practices of the 1980s have been returning with a vengeance, including for many lenders less leeway on credit score minimums. This means that even with mortgage interest rates at historic lows and with the federal government playing lip service to the notion that banks should get lending again, credit seems to be elusive to those with working-class incomes. How can lenders—and affordable housing advocates—support sound underwriting practices while also trying to keep appropriate amounts of credit flowing to underserved communities? How Did We Get Here? Buying your own home—a fixture of the American Dream—was once seen as the hallmark of stability and maturity. Double-digit interest rates enforced the idea that buying a home wasn’t something to be taken lightly. In the early ‘80s, loan programs beyond conventional fixed rates and government loans were few and far between, according to Mary Townley, director of homeownership for the Michigan State Housing Development Authority,: “Underwriting criteria was tough and most companies required a hefty down payment of 10 to 20 percent.” Under both the Clinton and Bush administrations, HUD, Fannie Mae, and Freddie Mac all aggressively pushed an expanded vision of homeownership through tax credits and other programs. “In the ‘90s guidelines adjusted and more and more programs rolled out into the market. These programs were created to provide options to homeowners since all of their situations were not the same,” Townley says. But it wasn’t necessarily the push to expand homeownership that caused the housing crisis. John Taylor, head of the National Community Reinvestment Coalition, (NCRC), argues that it was reckless, predatory lending practices and lack of regulation—not programs designed to helped lower-income homebuyers. “Nine out of 10 of the subprime loans had nothing to do with new homeowners,” he says. “They were refinancing or moving homeowners into bigger homes. I was there. I saw what Fannie and Freddie were doing. There were lenders that were making everyone rich at the expense of the homeowner and the investor. They squeezed the homeowner for everything they could.” 2012-04-24T18:39:03+00:00 http://www.nhi.org/article/2642/a_blueprint_for_responsible_homeownership/ http://www.nhi.org/article/a_blueprint_for_responsible_homeownership/a_blueprint_for_responsible_homeownership/#When:18:38:03Z Long before phrases like “qualified residential mortgage” or “credit risk retention” were bandied about in Washington, community activists in Boston, incensed by a 1989 study that found a pattern of racial bias in Boston’s mortgage lending, demanded action. What they got was the SoftSecond¨ Loan Program, which, over its 20-year history, has financed over 15,800 home purchases by low- and moderate-income families, representing $2.5 billion in bank mortgage financing. With significant lender-retained risk and loan performance that compares favorably to prime mortgage benchmarks, SoftSecond provides strong empirical guidance that can be useful in shaping a new national policy on extending credit to support responsible homeownership, something our economy desperately needs. Community Pressure Yields Innovative Mortgage Product The 1989 study by the Federal Reserve Bank of Boston was front-page news in The Boston Globe for nearly a year. It caused a torrent of criticism since the banking industry’s failure to serve minority homebuyers could not be explained by income, credit history, or other legitimate loan underwriting factors. Political leaders and community activists demanded that banks make more investments in non-white and lower-income neighborhoods, while the banks resisted, concerned that loans to lower-income homebuyers would result in massive defaults and foreclosures. Representatives from the Massachusetts Housing Partnership (MHP), the Massachusetts Affordable Housing Alliance (MAHA), the Massachusetts Bankers Association, Boston city officials, and others began meeting to find common ground and potential solutions. This working group designed a mortgage product with new underwriting standards for inner-city properties that would address common obstacles facing lower-income, first-time homebuyers, like high downpayments and costly private mortgage insurance. The result was SoftSecond, a collaborative program between the banking industry and state government. Participating homebuyers receive two fixed-rate bank mortgage loans: a first mortgage loan for 77 percent of the purchase price and a second mortgage loan for 20 percent. Both loans are offered with favorable pricing and no points charged, sometimes at a discount. The program requires a 3 percent downpayment (originally 5 percent), at least half of which must come from the homebuyer’s own funds (the balance can be a gift or through a down payment assistance program). The second mortgage loan is “soft” for the first 10 years, that is, payments are interest-only and are further reduced by state subsidies for income-qualified homebuyers. The state funds loss reserves for each bank (currently 3 percent of the second loan), so borrowers don’t need private mortgage insurance. This unique blend of fixed-rate private financing and state support lowers a borrower’s monthly mortgage payments by about 20 percent. SoftSecond homeowners may sell their properties at market value. Any interest subsidy funds provided to the homeowner are required to be repaid upon sale; after five years of ownership, borrowers retain at least 80 percent of any net appreciation. Launched as a pilot program in Boston in 1991 and expanded statewide in 1992, the program has served 4,858 first-time buyers in Boston and 11,028 first-time buyers in the rest of the state. In Boston, 68 percent of Boston SoftSecond homebuyers identified as non-white and/or Hispanic/Latino; 48 percent did statewide. Although buyers with incomes up to 100 percent of the area median income are eligible, 57 percent of SoftSecond buyers have incomes at or below 60 percent of area median income (average household income for SoftSecond buyers of $52,162 compared to median income in the Boston area, currently $96,500). In the past year 45 percent of SoftSecond purchases were in Massachusetts cities hardest hit by foreclosure. By placing a focus on low-income areas, the program can responsibly serve the lowest-income buyers and promote sustainable homeownership. SoftSecond loans have performed extremely well. Delinquency rates have consistently been comparable with those of prime mortgage loans in Massachusetts and foreclosure rates have been consistently lower. As of September 30, 2011, the delinquency rate for prime loans in Massachusetts was 5.60 percent; SoftSecond was 5.96 percent. The foreclosure rate for prime loans in Massachusetts was 1.88 percent; SoftSecond was .86 percent. As of September 30, 2011, the FHA delinquency rate for Massachusetts loans was 10.43 percent. 2012-04-24T18:38:03+00:00 http://www.nhi.org/article/2652/interview_sister_lillian_murphy/ http://www.nhi.org/article/interview_sister_lillian_murphy/interview_sister_lillian_murphy/#When:18:37:03Z Sister Lillian Murphy’s 25-year tenure as CEO of Mercy Housing has successfully fused a commitment to mission—building healthy, vibrant communities through core organizational values of respect, justice, and mercy—with a business savvy that has seen Mercy expand to 41 states and provide housing to more than 135,000 residents. Once a hospital administrator in California with little knowledge of affordable housing, Sister Lillian emerged as a leader in affordable housing finance, as well as an innovator who readily admits there is still more to learn when it comes to finding the nexus between housing and healthy living. Sister Lillian spoke with Shelterforce about the importance of mission, how Mercy plans to close the gap between supply and demand in affordable housing for low-income communities, and educating the next generation of community development professionals. Shelterforce: Please tell us about yourself and how you came to be with Mercy Housing? Sister Lillian Murphy: I was a hospital administrator before I came to Mercy. I had worked various positions in healthcare for about 15 years. I was on the board of a major healthcare system in California, and Sister Mary Therese Tracey was also on the board. Sister Therese was the first CEO of Mercy Housing, so when she would come out for meetings, we’d get together and I’d hear about what she was doing. It fascinated me. When she was leaving Mercy Housing, she called and said, “I think you should apply,” and I knew next to nothing about affordable housing at that point. But I eventually decided I’d do this, and I thought, “Well, maybe I’ll do it for three to five years, and then I’ll go back into healthcare.” Well, I immediately saw the connections between healthcare and housing, or lack of it, and really felt like we needed to bring a broader vision to this, and also a broader vision to what we were calling healthcare but was really acute care in the hospital setting. I loved it. When I first came, I can remember the first day, walking into the office and thinking, “This just feels so right.” And I haven’t regretted it ever since. You have done a remarkable job at Mercy. We have an enormously talented staff who are incredibly dedicated. Makes it all work. 2012-04-24T18:37:03+00:00 http://www.nhi.org/article/2634/going_upstream/ http://www.nhi.org/article/going_upstream/going_upstream/#When:10:00:07Z Rosalyn Keith used to run her own private dental practice in Tempe, Ariz., but over the past few years fighting to keep her home from foreclosure became so stressful and time consuming she mothballed her business and started working as an employee for another practice. What brought Keith to that point was a whole bouquet of the sorts of things that have been wrong with the mortgage system over the past decade. She bought at the height of the real estate bubble. A friend set her up with her original loan, which turned out to be a predatory, high-interest ARM. She suffered with the high payments for years and had finally secured approval for a modification to a new, fixed-rate, affordable loan a few years ago. But before the paperwork was completed, her loan was sold to another servicer. The new owner not only didn’t honor the modification, but didn’t contact her with information on how or where to pay until she was behind enough that they claimed they had “no choice but to foreclose.” From there, Keith was launched into a repeating series of payment plans, foreclosure rescue scams, unscrupulous or over-priced attorneys, servicers who tried to foreclose after having sold her loan (again) to someone else, mortgage interest she paid not reported to the IRS, and so on. She never received a loan modification. “The experience has been a total nightmare and many times I felt there was no way out,” she says. The ordeal has wrecked her credit so badly she figures she would have trouble qualifying for many apartments if she did lose her house. Besides, she loves her home, and after a dozen years there she is attached to her friends in the neighborhood, her church, and local places where she volunteers. So when a group called Second Opportunity of Arizona, (SOAZ) told her they had bought her loan, Keith can be forgiven for basically thinking, “Here we go again.” But luckily for her, SOAZ is different; it was created in order to buy loans for the goal of foreclosure prevention. The people at SOAZ “are the only ones who haven’t asked me for any money,” says Keith. “Everyone else has asked me for thousands and thousands of dollars.” Marcos Morales, president of SOAZ, worked with Keith to complete a sustainable loan modification that met her needs. “He kept in constant contact with me,” says Keith. “Most importantly, he did what he said he was going to do. He is my housing angel. I hope others going through my struggle will have someone like Marcos in their corner.” 2012-04-24T10:00:07+00:00 http://www.nhi.org/article/2633/distressed_mortgages_for_sale/ http://www.nhi.org/article/distressed_mortgages_for_sale/distressed_mortgages_for_sale/#When:10:00:00Z The news these days is constantly full of stories about the market for foreclosed properties. But how often do you hear about the market for distressed mortgages themselves? A lot less. That’s at least partly because it is private. Trades are rarely publicized. There are no exchanges or reliable services that report prices and volumes. Market participants do business under comprehensive non-disclosure agreements. But nonetheless these loans are being actively traded. According to knowledgeable participants, about $17.5 billion of residential distressed mortgages (roughly 100,000 loans) were likely sold in 2011. Approximately $26 billion (roughly 149,000 loans) were sold in 2010. Knowing something about how this market works and who is participating in it can be useful for those trying to stabilize neighborhoods with high concentrations of distressed loans—and possibly even open opportunities for partnership. How Distressed Loan Sales Work In mortgage capital markets, mortgages that are 30 or more days delinquent, including those that are in foreclosure, are described as “non-performing loans” (NPLs). Approximately 12.6 percent of all residential (one- to four-unit) mortgages are now NPLs, according to the Office of the Comptroller of the Currency and the Mortgage Bankers Association. That’s roughly 6.5 million loans, totaling approximately $1.13 trillion. NPLs are generally sold in groups or “pools” that can be as small as $1 million in unpaid principal balance (UPB), which would be five to six loans, to as large as $500 million UPB, or 2,500 to 3,000 loans. There have been rumors of NPL trades between very large sellers and very large buyers that involve pools over $1 billion in UPB, but they are unusual. Pools trade based upon pricing of the individual loans in the pool. As a result, individual pool prices can vary substantially based upon their precise composition. NPL pools are sold subject to acquisition due diligence by the buyer. Due diligence typically includes a review of each borrower’s situation to determine the likelihood of their loan performing again and a review of the original loan documents to see if all consumer disclosures were accurately made to the borrower, whether the loan was legally made, and that the loan documents are enforceable. The current market value of the secured property, its general condition, and its occupancy are also major focuses of pre-acquisition loan due diligence. After due diligence, the buyer may choose not to buy certain loans or to buy them at a different price. NPL purchase transactions often fall apart because of re-pricing after due diligence. Successful buyers tend to spend a significant amount of time pricing and analyzing pools before their initial bid to minimize this. Sellers will sometimes create pools tailored to the requirements of certain buyers. Such tailored pools, (“carve-outs”) usually include specific limits on geography, loan size, degree of delinquency, and other factors. Before creating a carve-out for a buyer, the seller must be assured that it will be adequately compensated for doing so. Repeat buyers with well-understood requirements are the most successful in negotiating carve-outs. Most of the loans sold in the NPL market today come from the large mortgage lenders. Those sellers tend to do large trades (average $300 million UPB). Sometimes investment banks and hedge funds buy loans from large lenders and resell a portion of the loans if they think that they can get a better return by flipping them. Small NPL buyers frequently buy from financial intermediaries that have purchased large pools from large lenders. However the original sellers acquired the NPLs, they are motivated to sell them by a combination of operational capacity constraints, profit taking (if they are financial intermediaries who create and resell small pools from large pools they have purchased), the need to report fewer non-performing mortgages on their books, and the desire to redeploy the capital tied up in these loans at a higher return elsewhere. 2012-04-24T10:00:00+00:00 http://www.nhi.org/article/2632/capital_markets_neighborhood_stabilization/ http://www.nhi.org/article/capital_markets_neighborhood_stabilization/capital_markets_neighborhood_stabilization/#When:07:00:17Z Jim Erchul of Dayton’s Bluff Neighborhood Housing Services in St. Paul, Minn., is worried. His organization is using NSP funds to fix up and reoccupy vacant homes in their service area. While Erchul, like so many others in the field, continues to fight the good fight and is making a valuable difference, he also makes no bones about feeling overwhelmed. He frets about the occupied but underwater homes that make up the rest of the neighborhood he works in. How are they going to afford to replace a roof or make other repairs with no equity? Do they all have to cycle through foreclosure eventually? “Are we making it better for a few families on a few blocks?” he says. “Sure. Can we affect the real estate market? It’s ridiculous to even talk like that. What’s happened is of such a magnitude that I see it taking more than a decade to work its way through.” A Question of Scale In response to the foreclosure crisis, the nonprofit community has rallied its resources and focused its attention on the spreading virus that is decimating fragile neighborhoods. We’ve covered many of these efforts in the pages of Shelterforce, from groups stepping up to make use of NSP funds, to the National Community Stabilization Trust, to efforts like New Jersey’s Operation Neighborhood Recovery (ONR). While much successful work has been done and many well-meaning and important policies have been enacted, the response from the nonprofit and public sectors has not been able to match the scale of the crisis. We are still, in 2012, facing escalating foreclosures: 3.5 to 5 million loans, depending on who you ask, are seriously delinquent or in foreclosure as of January 2012, and the New York Federal Reserve expects the number of houses going into REO status to be higher in 2012 and 2013 (1.8 million per year) than it was in 2010 and 2011. The New York Fed also estimates that 11 million homeowners are underwater, to the tune of $700 billion in negative equity. Since 2006, $7.3 trillion in home equity has evaporated. And, of course, with so many foreclosures already completed—2.7 million as of February 2011 just on loans taken between 2004 and 2008, according to the Center for Reponsible Lending—there is a vacancy crisis along with a foreclosure crisis. Even innovative programs like ONR and Boston Community Capital’s Stabilizing Urban Neighborhoods program (see p. 18) that have gotten much-deserved accolades within the field and even general media, count their victories in the dozens, maybe low hundreds. Programs that address one property at a time, or even a dozen or so, are operating orders of magnitude smaller than the problem. And many in the field are struggling with that knowledge. Though every saved home matters to its owners and neighbors, actually stabilizing neighborhoods will require operating close enough to the scale of the problem itself to shift market dynamics. Ridiculous? Maybe, maybe not. Where the Money Is To bring neighborhood stabilization to scale, perhaps we need to go, in the (apocryphal) words of bank robber Willie Sutton, “where the money is.” That is, the capital markets. While the community development field struggles to scale up, the for-profit sector is actively purchasing notes and REO, many in distressed communities. Many of them are operating, or planning to, at significant scale. As George Ostendorf describes on page 10, pools of thousands of delinquent mortgages already change hands regularly. The mission of those trading them, however, does not include neighborhood stabilization, and they are rarely aware of the nonprofit community’s work and challenges. Even those who would want to do right by those neighborhoods are constrained by the expectations of their investors. “We’re in a hurry,” says one. “We have to return money in two to three years after we get it. We had to turn down two families we thought we could modify. It took too long and we had to turn them down and foreclose. They both got their jobs back, but we couldn’t wait any more.” 2012-04-24T07:00:17+00:00 http://www.nhi.org/article/2653/occupying_occupy_lessons_from_central_brooklyn/ http://www.nhi.org/article/occupying_occupy_lessons_from_central_brooklyn/occupying_occupy_lessons_from_central_brooklyn/#When:06:59:04Z A few months ago I was scheduled to moderate a panel on how the Occupy movement would affect the foreclosure crisis happening in New York City’s neighborhoods. Like any veteran New York activist would, I seized the chance to snuggle up to a movement that had captured the imagination of progressives throughout the country. As it turned out, I had to bow out days before the event because of a conflicting appointment, but as the director of a predominately of color-led community organizing group in the Bedford-Stuyvesant/Crown Heights section of Brooklyn, it was hard not to read some larger meaning into this turn of events. Once again Occupy and the activist universe I participated in had crossed paths, but had failed to meaningfully work together. It’s too bad. We could use each other. This is not to say that I haven’t had plenty of Occupy moments since protestors first stormed Zuccotti Park back in September 2011. I’ve attended countless Occupy Wall Street actions, one in which I inadvertently came inches away from being arrested. I’ve huddled with some of its self-identified activists and blogged in solidarity with it. And as my organization has looked to fill important staff positions, many of the candidates had extensive Occupy credentials. What’s more, I’ve become a keen observer of how Occupy has remapped activist geography and culture. Although Occupy no longer dominates political discussions, “mic checks” are routinely invoked at town hall meetings. And everything it seems, from “Education,” to “the Hood,” to “Stop-and-Frisk,” has an “Occupy” tag preceding it, representing the endless areas of issue real estate that the Occupiers have staked out and claimed. I hope to meet up with an Occupy Bed-Stuy Organize, a group that is “in solidarity” with the Occupy movement, but presently, there is no discrete or consistent set of people, activity, and goals for my organization to sync up with. Which is okay. The more profound problems are found in the ways in which in Occupy and community-based work in Central Brooklyn – whether it be service delivery, community development, grass-roots neighborhood advocacy, or community organizing – are fundamentally at odds with one another. Put in technological terms, the Occupy movement is to traditional community-based work what smart phones are to desktop computers. Community-based work gains legitimacy and effectiveness from being stationary and having deep, place-specific, roots. In a place like Central Brooklyn, bragging rights accrue to families who have been in the same house for generations, with older Black Central Brooklites who were born and raised here often referred to as being “indigenous” to the area. In stark contrast, the unique culture of Occupy is mobile, nomadic, irreverent, and modular. Indeed, this non-rootedness is Occupy’s greatest strength, and the very basis of its success. What further complicates things is the fact that in Central Brooklyn the stereotypical Occupier – 20-something, recently arrived, white, and hip – is indistinguishable from the stereotypical gentrifier. And sometimes the last person who you want regaling you on displacement and economic inequity is the recent NYU graduate filmmaker from Colorado who just moved into the newly renovated Brownstone next door. All this makes it perhaps too convenient to write off Occupy as too white and too disconnected from the “Black community.” It’s no secret that, while Occupy has had a profound impact on activist culture, and for all its representation of the 99% and disenfranchised, it has not been an animating force among rank and file Black residents in Central Brooklyn, or any other predominately black neighborhood of which I’m aware. But who are we as Black organizers in black New York communities to judge? I’ve been working in Central Brooklyn for over 25 years and I’ve seen our own locally grown organizations in Central Brooklyn, many of which have been here for decades, function as political wallpaper. We too often operate innocuously in the background, failing to challenge the status quo or light the imagination of low-income people who have plenty to be angry and mobilized about. My organization is doing its part to buck this trend building by identifying issues of importance to local people and mobilizing them to change local and regional policies. But homegrown, membership-based, direct-action organizing groups are rare in Central Brooklyn, especially those run by us “indigenous” people. And ultimately, foundation support and non profit structures we work within do more to circumscribe and contain neighborhood power than unleash it. Not surprisingly, the most effective actions I’ve seen in this neighborhood – from defending public schools, to rallying behind people in danger of foreclosure – have been organized by people and grassroots bodies operating outside of established non profits structures. Meanwhile, the kind of decentralization and exhaustive participatory democracy valued by Occupy is virtually unthinkable in most community-based organizations. It’s tempting to ask whether the media, labor unions, and philanthropists alike would have lavished as much attention on a group of middle-aged, unemployed, non-college educated, black folks camping out in Zuccotti Park. Perhaps it’s not even a fair question. The more relevant one is, what can veteran community-based activists of color in New York learn, say, from Occupy’s ability to politicize and activate legions of true believers? What can we crib from their communications and messaging savvy, tactical creativity, and their genius in harnessing of righteous indignation? How do we decentralize our organizations, throw off the trappings of non-profit status, and trust democracy more? How do we build a sense of community beyond neighborhood boundaries and connect local issues to national struggle and outrage? These are lessons I hope to study in my own organization as we bring Occupiers into our fold and collaborate with Occupy’s new incarnations, especially now that Zuccotti is behind us. The point is, the Occupy Movement is not activism 2.0, at least not in Central Brooklyn. Rather, those of us with a legacy of neighborhood action and a lived understanding of racial justice must become the next generation of Occupy. Organize! 2012-04-24T06:59:04+00:00 http://www.nhi.org/article/2647/changing_the_conversation/ http://www.nhi.org/article/changing_the_conversation/changing_the_conversation/#When:06:59:04Z The Occupy movement’s National Day of Action to Stop Foreclosures on December 6th and the increased focus on housing issues that it launched have given us a glimpse of just how effective the Occupy movement can be beyond its signature town square-style occupations. In Atlanta, an Iraq War veteran avoided foreclosure and eviction thanks to action by Occupy Atlanta. A successful eviction blockade from Occupy Minneapolis ended with protestors calling after the departing law enforcement “Call us when you face foreclosure. We’ll be there for you!” Other places, Occupiers swelled the ranks of existing home defense campaigns (see page 44). Stretching across more than 20 U.S. cities, a new consortium called Occupy Our Homes is continuing to organize actions in neighborhoods where evictions, vacant properties, and foreclosures have had damaging effects. Spearheaded by local Occupations and including Alliance of Californians for Community Empowerment, Take Back the Land, Causa Justa :: Just Cause, The New Bottom Line (see related article in SF Fall 2011), and others, the campaign seeks to build on the energy of Occupy Wall Street and expand the movement’s advocacy portfolio by putting faces on a crisis that, at least nationally, is often characterized numerically or in abstract terms. Dave Snyder of Jewish Community Action in Minneapolis told The UpTake, a local citizen-run news service, that the Occupy movement had upped the ante for existing faith-led coalitions fighting for bank accountability. Snyder is an organizer of the interfaith Northside Community Reinvestment Coalition, which advocates with lenders on behalf of specific homeowners in foreclosure. While they may differ slightly on tactics, he said, Occupy has “opened up political space to make broader demands. It’s a critical movement [and] we’re grateful that they’re putting their bodies on the line to make the space for us to articulate these demands.” Shelter Shorts 2012-04-24T06:59:04+00:00 http://www.nhi.org/article/2644/city_life_and_occupy_a_developing_relationship/ http://www.nhi.org/article/city_life_and_occupy_a_developing_relationship/city_life_and_occupy_a_developing_relationship/#When:06:58:04Z This past August, a broad new coalition in Boston formed to plan a massive march against Bank of America and other corporate targets on September 30. A smaller group also began organizing to occupy a vacant foreclosed building and lot on October 1. Both these actions were timed to coincide with the national Right to the City Coalition Assembly in Boston, and both involved carefully developed union-community cooperation. Then, on September 17, Wall Street was “occupied” and planning began for an occupation in Boston also to start on September 30. City Life/Vida Urbana and other organizations involved in the preexisting plans had members at the Occupy Boston general assemblies. We urged that the initial occupation be put off a week to avoid competing with the Right to the City message. Despite that effort, the occupation of Dewey Square in Boston went ahead on September 30. It took place a few moments after 3,000 people converged on Bank of America, accompanied by civil disobedience and 24 arrests. That march was amazingly diverse as the bases of the sponsoring organizations turned out in force. Nevertheless, the press interpreted the action as part of Occupy. The next day, hundreds showed up on Fowler Street in Dorchester to occupy a vacant foreclosed building and construct raised gardens in a vacant lot. Again, it was seen as an Occupy event. These were early misunderstandings, but an important political issue also emerged. City Life is a “base-building” group. We seek to organize those directly affected by a problem—currently the mortgage/foreclosure crisis. We seek to build a movement where the people affected are the ones in leadership. City Life is a “radical” organization; however, to us, a vigil with no arrests but participation from those affected is more “radical” than civil disobedience where those affected are not participating. Many in Occupy agree with this interpretation, but much of the debate in and around Occupy results from differences over this historic question of left organizing. In practice, City Life has helped to build a radical movement around the recent crisis that is led by those affected and does, in fact, engage in a lot of civil disobedience and an amazing pace of direct action. This has included both eviction blockades (32 through November 2011) and building occupations. In October, City Life began inviting Occupy members to visit our weekly meetings. Several of our members were regulars at the encampment. We took large delegations to MassUniting marches organized out of Dewey Square and to the Occupy the Hood event in Dudley. Occupy members came to several of our rallies and actions. We issued a national statement defending the right of communities to occupy vacant foreclosed buildings in their midst, but we urged that those tactics be used to support a base-building strategy. These interactions gradually overcame some skepticism on our part. Our initial reaction included awareness of the tendency of the media to cover events organized by those with relative privilege but not events organized by those directly oppressed. On the other hand, we quickly began to understand that Occupy was a political moment triggered by the encampments but carrying implications far beyond that. As the head of MassUniting commented, “You can build a beautiful ship, but you can’t create the wind. Occupy is the wind.” City Life had already had extensive discussions in our Leadership Team meetings about Egypt and Tahrir Square. Occupy was the U.S. extension of that movement. And so, when the national Occupy movement (in partnership with many community organizations) turned to these tactics in December as the next stage of their struggle, City Life built upon its ongoing conversations with Occupy members in order to respond. City Life and a handful of Occupy members set up small group discussions to develop joint work. Our intent is to relate to a group of Occupiers who retain their organizational identity but respect the discipline of City Life’s base. Our first collaborations occurred on December 16 and 19. The first was a press conference at the building City Life occupied on Fowler Street. City Life presented members who had gotten their homes back at real value, as well as the tenant moving into Fowler Street. An Occupy member made a strong statement about planning joint work with City Life. On December 19, Occupy members choreographed a skit at a demonstration in front of HUD’s regional office in Boston, protesting HUD-mandated evictions in foreclosed buildings. The Occupy skit used a Star Wars theme to chase away the evil Count Bankula (City Life’s puppet). Everyone was pleased by these first collaborations and looking forward to further struggles in 2012. Organize! 2012-04-24T06:58:04+00:00 http://www.nhi.org/article/2655/access17/ http://www.nhi.org/article/access17/access17/#When:06:00:04Z Safeguard Properties, a Cleveland-based mortgage field services company, has assembled and is maintaining a matrix of known vacant property registration ordinances. CFED has launched JoinBankOn.org, an online resource-sharing and networking tool designed to connect un- and underbanked individuals with low-cost, non-predatory financial products. The U.S. Department of the Treasury, in partnership with the San Francisco Office of Financial Empowerment, the National League of Cities and the New America Foundation, supported the tool. A Canary in the Mortgage Market?, a white paper from NYU’s Furman Center for Real Estate & Urban Policy, looks at potential implications of recent reductions in the maximum loan size that can be guaranteed by Fannie Mae and Freddie Mac or insured by the FHA. The Way Forward: Moving from the Post-Bubble, Post-Bust Economy to Renewed Growth and Competitiveness, from the New America Foundation’s Economic Growth Program/World Economic Roundtable, offers an overview of the credit bubble of the 2000s, a look at the policy responses, and a recovery plan. The Impact of Vacant, Tax-Delinquent and Foreclosed Property on Sales Prices of Neighboring Homes, from the Federal Reserve Bank of Cleveland, studies the impact of vacancy, neglect associated with property-tax delinquency, and foreclosures on the value of neighboring homes using parcel-level observations. House and Senate Funding Bills Risk Loss of Rental Assistance for Thousands of Low-Income Families, by Douglas Rice at the Center on Budget and Policy Priorities, anticipates “deep and disproportionate cuts” in the HUD funding bill for FY 2012. The report suggests that Congress can prevent the loss of rental assistance for tens of thousands of low-income families by combining key features of bills approved by the House and Senate committees. Lost Ground, 2011, from the Center for Responsible Lending, tracks the foreclosure crisis, updates the Center’s previous findings, and expands datasets while looking at who has lost their home and is at risk, what types of mortgages they received, and where the foreclosure crisis had the greatest impact. Criminalizing Crisis: The Criminalization of Homelessness in U.S. Cities, a new report from the National Law Center on Homelessness & Poverty, looks at how local laws across the country are increasingly criminalizing homelessness. Finding Common Ground: Coordinating Housing and Education Policy to Promote Integration, a new report from the Poverty & Race Research Action Council and the National Coalition on School Diversity, looks at research on the relationship between government housing programs and school segregation. Creating Whole Communities: Enhancing the Capacity of Community Nonprofits in the St. Louis Region, from the University of Missouri’s Public Policy Research Center, examines successes, challenges, and needs of 34 nonprofit organizations across the St. Louis region. Access 2012-04-24T06:00:04+00:00 http://www.nhi.org/article/2654/industry_news22/ http://www.nhi.org/article/industry_news22/industry_news22/#When:06:00:04Z People Michael Stegman joined the U.S. Treasury Department in January as counselor to Secretary Timothy Geithner. Stegman previously served as director of policy and housing for U.S. programs at the John D. and Catherine T. MacArthur Foundation and before that as assistant secretary for policy research and development at HUD in the Clinton administration. Sarah Rosen Wartell took over as president of the Urban Institute in February, becoming only the third president in the research organization’s 43-year run. Wartell, a co-founder of the Center for American Progress, succeeds Robert D. Reischauer, UI president since 2000. Sam Yoon, former executive director at the National Association of Community Economic Development Associations (NACEDA), has taken a position in the Obama administration at the Department of Labor, Employment and Training Administration. Yoon, a one-time member of Boston’s city council and co-founder of the Asian Political Leadership Fund, arrived at NACEDA in 2010. Economist Danilo Pelletiere has joined the Office of Economic Affairs in the Office of Policy Development and Research (PD&R) at HUD after serving nearly nine years as research director and chief economist at the National Low Income Housing Coalition. Van Temple is now director of New Orleans’s new Crescent City Community Land Trust, returning to his native Louisiana after five years serving as executive director of Diamond State Community Land Trust in Delaware, one of the first statewide CLTs. Temple was central to the founding, building, and early growth of Diamond State. Temple recently wrote “The Road Less Traveled: Funding a Land Trust with NSP” for Shelterforce Online. Sarah Gerecke is now a senior policy advisor at HUD, working in the office of the assistant secretary of housing/federal housing commissioner to help develop policies relating to housing counseling and education, the disposition of FHA-foreclosed properties, and other critical matters. The former executive director of the Furman Center for Real Estate & Urban Policy at New York University arrived at HUD in November 2011. Sarah McGraw Greenberg is the new director of the development division of NeighborWorks America. Most recently senior manager for community stabilization, during her tenure at NeighborWorks, Greenberg has created and managed its America’s Stable Communities Initiative and has also managed its role in the creation of the National Community Stabilization Trust, a partnership with five other national housing intermediaries. Emily Thaden is the new Community Land Trust Academy director for the National CLT Network. Thaden previously served as the shared equity program manager for the Our House program of The Housing Fund in Nashville. She is also a doctoral candidate in the Community Research & Action Program at Vanderbilt University’s Peabody College, where she is writing her dissertation on shared equity homeownership. Thaden wrote “Stewardship Works” for the Fall 2010 issue of Shelterforce. Our Lot author Alyssa Katz has joined Columbia University Graduate School of Journalism, launching The New York World, a news outlet staffed by J school graduates that focuses on muckraking journalism about New York City government. Before Columbia, Katz had a four-year stint as senior fellow for policy and communications at the Pratt Center for Community Development. Former Joe Biden economic advisor Jared Bernstein and former Treasury Assistant Secretary Phillip Swagel have been named senior fellows at the think tank The Milken Institute. Organizations Twelve members of the Housing Partnership Network are sharing $2 million in grants to support programs that offer “new solutions to the ongoing challenges of neighborhood stabilization.” The awards, funded under the Innovations in Neighborhood Stabilization and Foreclosure Prevention Initiative, were created with a $2.75 million grant from the Citi Foundation. For a list of grantees, go to www.nhi.org/go/Citi/HPN. Industry News 2012-04-24T06:00:04+00:00 http://www.nhi.org/article/2651/qrms_downstream_effect/ http://www.nhi.org/article/qrms_downstream_effect/qrms_downstream_effect/#When:06:00:04Z The discussion around how to define a qualified residential mortgage (QRM) has dragged on for over a year now, with no end in sight. But advocates haven’t let it go, and are continuing to raise the volume on their concerns about the proposed definition’s negative long-term, downstream effects on the housing market. The Dodd-Frank Act says MBS issuers must retain 5 percent of the risk for securitized mortgages, but exempts risk retention for a small category of “very safe” loans—QRMs. Federal regulators have proposed that part of the definition of very safe be a minimum down payment of as high as 20 percent. Housing and fair lending advocates have said both publicly and in comments to regulators that that could create a dual mortgage market: QRMs for those who can afford them and essentially subprime loans for everyone else, most notably for first-time homebuyers, people of color, and people with little savings or disposable income. Others say a high downpayment requirement for QRM could further concentrate lending in the too-big-to-fail banks that can afford to keep nonconforming loans on their books. “This would really be a major step back for middle America as well as for the low-income households who are looking to be homeowners in the future, said David Berenbaum, chief program officer for the ‘National Community Reinvestment Coalition, adding that a 20 percent down QRM could “disqualify many more households for homeownership.” The Center for Responsible Lending, in comments to regulators, suggested that a final rule should eliminate downpayment as a defining factor altogether: “This would ensure that QRM loans are not only sustainable and properly underwritten, but also affordable to most homebuyers.” NCRC, CRL, and other traditional advocates are not alone. Mortgage Bankers Association, the National Association of Realtors, and other industry titans, share the same view (though their motives and opinions on other aspects of what makes a safe loan product may be somewhat different). In February, David Stevens, MBA president and former head of FHA, told National Mortgage News that a 20 percent down payment restriction would amount to “a direct attack on first-time homebuyers, African-American borrowers, and Latinos.” Shelter Shorts 2012-04-24T06:00:04+00:00 http://www.nhi.org/article/2650/do_foreclosures_make_us_sick/ http://www.nhi.org/article/do_foreclosures_make_us_sick/do_foreclosures_make_us_sick/#When:06:00:04Z New research shows a direct correlation between foreclosure and hospitalization, adding another way that foreclosures have a disparate effect on low-income communities and communities of color. The study, Is the Foreclosure Crisis Making Us Sick?, conducted by economists Janet Currie and George Tekin and published by the National Bureau of Economic Research in August 2011, compared foreclosure data from 2005 to 2009 with emergency room visit rates and hospital discharge data in New Jersey, California, Arizona, and Florida. It found that increased foreclosures lead to more medical visits for health conditions such as hypertension, depression and anxiety, and other physical complaints that are likely tied to stress. The NBER report is one of a series of recent academic findings linking health and foreclosure. Researchers at the University of Maryland School of Medicine, for example, examined mental health and foreclosure in their October 2011 study published by the American Journal of Public Health. In it they conclude one in five homeowners in default on their mortgages have serious symptoms of depression—a rate that took even researchers by surprise. It is well documented that substandard housing disproportionately affects the health of poorer communities and communities of color, but with foreclosures—which also disproportionately affect those communities—added to the list of health risks, it’s clear that already at-risk populations will face even worse health challenges. Currie warns that the health consequences they identified will only get worse as sustained high levels of foreclosure coincide with growing unemployment. Who will take the lead in addressing the problem? Currie told Shelterforce that an effective solution “probably requires both public health advocates and housing activists to be involved.” In the spring 2012 issue of Shelterforce, we’ll look at various ways that both of those sectors are working to improve health, housing, and communities in tandem. Stay tuned. Shelter Shorts 2012-04-24T06:00:04+00:00