http://www.shelterforce.org/ The journal of affordable housing and community building en Copyright 2009 2009-11-22T08:00:15+00:00 http://feedproxy.google.com/~r/Shelterforce/~3/dfnCogQ5MgE/ http://www.shelterforce.org/article/in_pursuit_of_a_responsible_homeownership_policy/in_pursuit_of_a_responsible_homeownership_policy/#When:07:00:15Z While the burst of the housing bubble recedes into the past, its echo continues to reverberate throughout the economy and in communities across the land. The U.S. housing market remains a mess. Home values have steeply fallen from their 2006 peaks, loan defaults have reached historic levels, and the implosion of the housing finance system may take years to rectify. The latest figures from the Mortgage Bankers Association report over 8 percent of all mortgages were at least one month late during the first quarter of 2009, which is the highest figure since tracking began almost 40 years ago. Additionally, almost 4 percent of mortgages were in foreclosure. Taken together, 12 percent of all Americans with a mortgage are in trouble and prospects look dim for improvement in the housing market until well into 2010. The picture actually looks worse in certain markets and states. Standard & Poor’s Case-Shiller Home Price Index, a widely watched measure of 20 metropolitan areas, fell a record 19 percent over the last year. In Las Vegas, the drop was almost 33 percent. Woe to the family looking to move from Nevada, Arizona, California, or Florida for a job opportunity elsewhere. Of course, these families and others have a right to expect their policymakers to help chart a way out of this muddle. Looking back in hindsight, it seems that too many irresponsible actors were allowed to operate without supervision. The challenge now is to craft a more responsible housing policy. This should necessarily include support for both rental housing and homeownership as well as transforming our housing finance system so it once again is known less for its profitability and more for its delivery of safe, sound, and appropriate mortgage products. In the near term, policymakers will be expected to assist distressed homeowners and prevent mass displacements. The Obama administration’s anti-foreclosure plan debuted in February to generally positive reviews but it has been slow to take hold. What they dubbed the “Making Home Affordable” program strives to enable homeowners whose home values have declined to take advantage of falling interest rates and refinance their mortgages at better terms. And perhaps more significantly, it encourages mortgage servicers to modify existing loans by lowering monthly payments or writing down the principal. Advocates have argued that additional sticks are required to ensure that mortgage principals are lowered when appropriate. And they seem to have a point, as servicers appear to prefer modifying loan terms even when this isn’t enough to avoid foreclosure. Months after the initial rollout, there remains concern that the plan can reach enough homeowners to make a difference and do so before their household finances completely erode. The administration’s plan is likely to need additional revisions but they had the right instincts which was to put real money on the table, $75 billion, to make sure the servicers don’t stay on the sidelines. Of course, the policy is still reliant on the performance of the broader economy. If massive job losses persist, people will not be able to stay current on their payments, even after their loans have been refinanced or modified. This means that stabilizing housing markets will depend on the quality and character of the economic recovery. But soon enough, policymakers will have to decide what a sustainable and responsible housing policy looks like for the future. As they set out on this task, it would be wise for them to acknowledge the underlying cause of the housing crisis: a finance system that allowed for the inflation of a now-burst housing bubble. The previous demise of the stock market bubble redirected capital back into global markets via our housing stock and a seemingly insatiable appetite for mortgage-backed securities. Eventually these securities were sliced, diced, and sold in such a manner that it became difficult to assess their underlying value and risk. The rise in homeownership rates, which topped out at a record 69 percent in 2004, was aided by a policy push—begun under President Clinton and continued by President Bush—to get more lower-income families into the market as homeowners. But we should not blame these new buyers for the upward pressure on home prices. Pervasive cheap credit and the advent of risk-based pricing (otherwise known as subprime lending) expanded the market and allowed more people to get into good homes through good loans. Unfortunately, a rise in predatory practices was also used to get good people into bad loans that they could not afford over the long term. Many well-intentioned advocates overlooked the dangers and risks posed by homeownership for certain families or the growing prevalence of predatory lending. A number of groups were paying attention, such as the Center for Responsible Lending, which has been dedicated to protecting homeowners from abusive financial practices. They were on the case, but the concerns they expressed to policymakers went mostly unheeded. Instead, the watchdogs were told that lenders were already overregulated. In a February 2009 op-ed in The Wall Street Journal, former Texas Republican Senator Phil Gramm sought to blame the Community Reinvestment Act (CRA) for causing the housing crisis, since he claimed it forced banks to loan to risky borrowers. This is a weak claim lacking empirical evidence. CRA, which has been on the books for over 30 years, was never an excuse to make loans that would not perform. There were many ways to get an “outstanding” rating for the banks that were being assessed under CRA, and they could do so through safe, sound, and fair lending. These arguments ignore the reality that many loans were made by unregulated firms in the alternative banking sector not covered by CRA. The political attacks by Graham and others on the right have become a distraction from the real work of figuring out how to fix our housing markets. 2009-11-22T07:00:15+00:00 http://www.shelterforce.org/article/in_pursuit_of_a_responsible_homeownership_policy/in_pursuit_of_a_responsible_homeownership_policy/#When:07:00:15Z http://feedproxy.google.com/~r/Shelterforce/~3/e6PRGBE5rjk/ http://www.shelterforce.org/article/a_21st_century_vision_for_community_development/a_21st_century_vision_for_community_development/#When:07:00:56Z Across the country, community development corporations (CDCs) have responded aggressively and effectively to the challenges of the current economic crisis. But at the same time, funders, investors, scholars, policy makers and many practitioners are asking if the CDC model still works. Can CDCs help this country recover? Do we need a different organizational model or models to achieve our goals in the coming years? Such questions are scary and threatening to many of us, particularly at a time when CDCs (like everyone else) are struggling. But community developers and their supporters need to take this opportunity to seriously examine the challenges, to listen to the critics, to take a hard look in the mirror, and to articulate a vision and a strategy for the future, rather than reflexively defend our past models and practices. To remain effective, CDCs and their funders, investors and partners must be willing to change. If they are, CDCs will play a critical role in helping our country recover from today’s economic challenges so that all of our communities and residents participate in that recovery. Ground Rules For Change As we figure out what form this “change” will take, we need to engage in an ongoing dialogue—one that’s ostensibly already begun. Unfortunately, the conversation that examines the future of CDCs that has unfolded across the country so far has been plagued by confusing rhetoric, varying priorities, multiple agendas, unproductive turf battles, and a quest for a one-sized-fits-all solution for the entire country. We must get past these obstacles and have a thoughtful conversation about the future of the field. For the past two years, the Massachusetts Community Development Innovation Forum, a project jointly sponsored by MACDC and the Boston office of the Local Initiatives Support Corporation and supported by a broad cross section of people and organizations in the community development field, has launched a deep examination on the future of the field. From this experience, which continues to unfold, there are five critical ground rules that should guide any discussion: Identify shared values. Talk about the shared, core values rooted in social, racial, and economic justice committed to both community and individual empowerment. Be results-oriented. Performance is critical—and it must be measured and rewarded. “Performance” includes the production of homes, jobs, and businesses, but it should also include community leader development, the creation of healthy neighborhoods and linkages across sectors and programs, as well as the cultivation of strong community and civic life. Some of these outcomes are harder to measure, but they are no less important. Acknowledge the past. We’re preparing for change, and it’s essential to recognize and honor the achievements of CDCs and their partners over the past 40 years. In Massachusetts, for example, this is done annually with the publication of the Growing Opportunities Assets and Leaders (GOALs) that reports the success of MACDC members. While the CDC model needs to be revisited and constantly updated for changing times, it has been remarkably effective, durable, and flexible, working across diverse communities and economic climates. Be flexible: While we should not ignore lessons learned over the past 40 years, we also must not be trapped by old orthodoxies, ideologies, and habits that no longer make sense. CDCs, intermediaries, CDC associations, foundations, policy makers—all of us should be subject to review, critique and reform. Coming to “terms.” Perhaps the term that creates the most confusion is the one at the center of this conversation: “community development corporation.” After 16 years working for a CDC association, I like to joke that I still don’t know what a CDC is. But it is no joke. None of us really knows. The extraordinary diversity that exists among CDCs (and the communities they serve) makes it hard to craft a meaningful definition, making it challenging to appeal to funders and policy makers, to develop consistent metrics and standards, and so on. Discussions about the future of CDCs and the role that CDCs should play are therefore confusing. Are there too many of them or not enough? Are they too small to be effective or too big to be genuinely accountable and rooted in local neighborhoods? Are they too focused on bricks and mortar or not sufficiently capitalized and staffed to be effective real estate developers? Are they trying to do too many things at once or are they not comprehensive enough? The questions can go on and on and there are at least a few CDCs that can be highlighted to underscore any criticism or viewpoint. At best, the lack of shared understanding makes it hard to have a coherent discussion. At worst, this confusion could take the movement in the wrong direction. Participants in the Massachusetts Community Development Innovation Forum vigorously debated whether it was helpful to establish a common definition of the term CDC and if so, what that definition should be. Compelling arguments were made that any definition would be both too broad and too narrow and it was not really important to distinguish CDCs from other nonprofits so long as the work was getting done. Others argued it was necessary to define the field in order to attract resources, credibility and to develop infrastructure, standards and metrics to enhance performance. The idea is that knowing which organizations qualify as a CDC will help strengthen the field in much the same way that the Federal CDFI program has led to a major expansion of CDFIs in this country. In the end, we agreed to file new legislation designed to update a 1977 statute that had created a standard definition of the term that was now largely ignored. The bill would create a more flexible definition that reflects the diversity of the field and would require the state to formally certify CDCs. Such a program could enhance the field’s credibility, attract resources, and expand impact. Our proposed definition addresses both who governs the organization and what the organization does. Specifically, to be a CDC, the bill states that: The organization must be governed by the constituency it serves. This means that their board of directors must be representative of their community, in terms of geography, income and ethnicity. Further, the organization must be authentically rooted in the community and provide local residents with genuine decision making roles. A primary purpose of the organization must be to engage local residents and businesses to work together to undertake community development programs, projects and activities that develop and improve urban, rural and suburban communities in sustainable ways that create and expand economic opportunities for low and moderate income people. So where do we go from here? How can policy makers, funders, and practitioners contribute to a strong, effective and durable community development movement for the 21st century? Here are eight ideas for what we need to do. 2009-11-21T07:00:56+00:00 http://www.shelterforce.org/article/a_21st_century_vision_for_community_development/a_21st_century_vision_for_community_development/#When:07:00:56Z http://feedproxy.google.com/~r/Shelterforce/~3/CHtLM-MykQg/ http://www.shelterforce.org/article/ruling_a_step_toward_a_fully_integrated_society/ruling_a_step_toward_a_fully_integrated_society/#When:07:00:47Z In August, New York State’s Westchester County entered an agreement that could result in dozens of towns and villages within its borders to aggressively promote fair housing. The agreement, the result of a suit filed by the Anti-Discrimination Center, was brokered in part by the U.S. Department of Housing and Urban Development, stipulates that the county spend $50 million to get towns to build 750 housing units for low-and-moderate-income residents. Initially, the county claimed getting its towns to change zoning ordinances would be difficult, thus making it even more daunting of a task to build workforce and affordable housing, but the agreement was signed, emphasizing the lack of housing in small Westchester towns for blacks and Latinos. The agreement represents a sea change in philosophy, according to Ron Sims, the deputy secretary at HUD, who told The New York Times that the agreement was “consistent with the president’s desire to see a fully integrated society.” Shelter Shorts 2009-11-21T07:00:47+00:00 http://www.shelterforce.org/article/ruling_a_step_toward_a_fully_integrated_society/ruling_a_step_toward_a_fully_integrated_society/#When:07:00:47Z http://feedproxy.google.com/~r/Shelterforce/~3/Qit2Z22jrBY/ http://www.shelterforce.org/article/tough_love_for_tarp/tough_love_for_tarp/#When:07:00:43Z The Congressional Oversight Panel assembled a year ago when TARP was enacted in order to review the regulatory system and financial markets offered some encouraging words, but an overall sobering analysis in October in examining the state of the administration’s efforts to stem foreclosures: Make your policies work for the crisis as it currently exists, and not as it existed six months ago. Specifically, the report gives an updated analysis of Making Home Affordable, which comprises the Home Affordable Refinance Program (HARP), aimed at helping homeowners refinance more affordable mortgages, and the larger Home Affordable Modification Program (HAMP), that aims to reduce mortgage payments to keep people in their homes. Those programs, according to the panel’s Elizabeth Warren, have helped “at least temporarily,” and could continue to help in the long term, but, she added, “three major concerns” still haunt the market, as one in eight mortgages is now in default, and foreclosures could rise as high as 12 million in the months to come. The report documents concerns about the scope and scale of Making Home Affordable, as well as asking if it’s solving the problem, or simply dragging it out. Most worrisome, however, is Warren’s assertion that Making Home Affordable is simply anachronistic at this point, addressing a foreclosure crisis as it existed in March 2009, pointing out that HAMP only helps certainly types of borrowers, like subprime borrowers, but not other foreclosures, like those caused by unemployment—one of the biggest drivers of foreclosure. Warren also expresses concern about the speed of the programs, saying that foreclosures are expected to outpace modifications by about two to one. Somewhat softening the blow, however, was data released by the administration the same week as the COP report announcing that its goal of reaching 500,000 trial loan modifications was achieved almost a month ahead of schedule, but with foreclosure filings up 23 percent from a year ago, according to RealtyTrac, that’s hardly reason to cheer, in fact, “the picture’s gotten worse,” Warren said. Shelter Shorts 2009-11-21T07:00:43+00:00 http://www.shelterforce.org/article/tough_love_for_tarp/tough_love_for_tarp/#When:07:00:43Z http://feedproxy.google.com/~r/Shelterforce/~3/gvVWkH-s41M/ http://www.shelterforce.org/article/livin_tiny_in_texas/livin_tiny_in_texas/#When:07:00:35Z At this point, it’s a good thing that we’re getting used to the greening trend in development, as well as in land-use planning, that encourages more energy and economically efficient ways of living. But normally when we think of that, we think of more dense regions, where existing infrastructure, namely transportation, lends itself to increased efficiency. Not so in Texas: a big state where some folks are thinking little. The Luling, Texas-based Tiny Texas Houses takes a “Salvage Building” concept and creates, well, really little houses, ranging anywhere from 12-foot by 16-foot to 12-foot by 28-foot. Our question is, with those little houses, is placing a shed on your property considered a subdivision? Shelter Shorts 2009-11-21T07:00:35+00:00 http://www.shelterforce.org/article/livin_tiny_in_texas/livin_tiny_in_texas/#When:07:00:35Z http://feedproxy.google.com/~r/Shelterforce/~3/6RBK6eK5GlM/ http://www.shelterforce.org/article/shelterforce_interview_xavier_de_souza_briggs/shelterforce_interview_xavier_de_souza_briggs/#When:07:00:26Z Xavier de Souza Briggs, Associate Director for General Government Programs at the White House Office of Management and Budget is responsible for not only the “budget” of numerous government agencies and departments but also provides guidance to these agencies so that each of their individual programs and efforts contribute to the entire agenda and support each other. Briggs’ portfolio includes HUD, the Treasury, Commerce, Justice, Transportation, and Homeland Security departments, as well as the U.S. Postal Service and the government-sponsored enterprises like Fannie Mae and Freddie Mac. All of these make a direct and profound impact in the community development world. And community development is a field that Briggs knows intimately. Early in his career he was a planner in the South Bronx and later a senior official at HUD during Clinton’s second term. He has also been a professor at Harvard’s Kennedy School of Government, and then at MIT’s Department of Urban Studies and Planning. He has researched and written on many aspects of the field including metropolitan strategies, race, housing, poverty and grass-roots civil society organizations. In his forthcoming book, Moving to Opportunity (co-authored with Susan J. Popkin and John Goering) Briggs takes a close look at this controversial program to help families out of communities with concentrated poverty. Briggs’ most recent article in Shelterforce, “Urban Policy Next” (Fall 2008), laid out a comprehensive approach to urban development, including a push for increased public-private coordination for cities to compete globally, with regional planning centers and regional councils. Clearly, this is a part of the Obama administration: to not work in isolation. So how do we put it all together? On June 24, 2009, Briggs spoke with Shelterforce at his office at the Eisenhower Executive Office Building. The hour-long conversation covered a range of topics including the philosophy and politics of urban revitalization the nuts and bolts of community development, visions for the future, and why, in trying economic times, “we have to act quickly and we have to be careful at the same time.” SF: Please tell us how you arrived at the Office of Management and Budget? Late last summer, I was involved with two of the Obama campaign’s policy committees, the ones dealing with urban policy and housing policy. They were overlapping but somewhat distinct groups. I was also helping to canvass voters, mainly in New Hampshire, since I could drive up from my home in Boston. Then, I got a call in mid-September asking me to be a part of the transition team for phase one, which meant the pre-election phase. They were asking me to join this team of people thinking about “how the Obama administration should govern if the Senator wins.” Suffice it to say, it’s something you make time for and it was an honor to be asked. It was extraordinary to be able to serve in this way and to reconnect with great people with solid values, policy smarts, and political savvy. The transition team experience was a real highlight of my career. I was part of the HUD Agency Review Team. The transition was organized into agency reviews and then crosscutting themes like climate change or energy policy, things that are bigger than one agency. We worked feverishly and delivered a document that was very prospective, because the outcome of the election was still uncertain, of course, and we had not had access to the agency itself. We had to rely on publicly available information, our own assessments of what had been going on at HUD and in the communities and issue areas in which HUD is active, and so on. But this was still a pre-transition—it’s not a real transition ‘til you’ve won. But then you did win. Obviously there was great excitement. And in the late stages there, in the last few days before the election, the feeling was that the team had done a great job. The transition leadership asked us if we would consider staying on as part of a Phase II, post-election. The transition paid extraordinary attention to effective management and implementation, and what it would mean to have a successful first hundred days, first year, first two years, and so on. And the word came very early on from Phase I prior to the election and was underscored in Phase II afterward: “We’re out to put the president and his leadership team and the whole cabinet in a position to steer the machinery of government in a way that very quickly signals a turn on policy issues, a commitment to making government work again, rebuilding the public confidence, and a commitment to transparency around results.” All this was fantastic for me as someone who, beyond my urban policy background, has taught strategy, management, negotiation, and collaboration through the years. And to really know, too, that this was spelled out very concretely in working principles—this was fantastic. What types of expectations did you have going into the transition? The campaign ran under a “no drama” ethic. We wanted the transition to do the same. They basically said, “We thank you for your service, but this invitation is not a signal that you will be invited to serve in the administration. You do this for the country, period.” That was how it was, and I was fine with that. I think everybody else who signed up was, too. I appreciated that message. I think we all did. 2009-11-21T07:00:26+00:00 http://www.shelterforce.org/article/shelterforce_interview_xavier_de_souza_briggs/shelterforce_interview_xavier_de_souza_briggs/#When:07:00:26Z http://feedproxy.google.com/~r/Shelterforce/~3/1YFUApUij6k/ http://www.shelterforce.org/article/the_stimulus_making_sense_of_it_all/the_stimulus_making_sense_of_it_all/#When:07:00:16Z As of mid-October, nearly $110 billion of the $787 billion in stimulus—over 36,000 projects—had been accounted for, with an additional $144 billion in the process of being distributed, according to Pro Publica. When speaking of the American Recovery and Reinvestment Act and its intended purpose to create or save 3.5 million jobs and to rescue the economy, we’re certainly seeing the “shovel ready” projects in place to rebuild—and not just repave—infrastructure, but we’re also witnessing the means by which deployment decisions are made, along with the Obama administration’s new budget priorities and commitment to leveraging funds and building collaborations that offer new opportunities for low-income families and communities. Now that plans have been made and billions have been disbursed or are on their way, how is it all working? Moreover, how will it affect housing policy? Do the funds promote collaborations, and if so, will those collaborations result in lasting systems change for more effective community development? Will these collaborations change the nature of what community developers are doing? Are we finding that there is greater emphasis on regional systematic thinking that allows for compromise? The authors of the following 11 essays were asked to consider not just the obvious bricks and mortar issues like how many foreclosed homes are being revived or how many windows are being weatherized, but also what it all means for the neighborhoods we care about. The authors, an array of leading voices in the community development field, point to the benefits of the stimulus, while offering critiques of how, or if, it falls short and how it can be improved to ensure equity analysis of what’s working and what isn’t. In Ohio’s Cuyahoga County for example, the Cuyahoga County Land Reutilization Corp., the county housing authority, and a consortium of partners putting together a joint Neighborhood Stabilization Program application, requests $74 million for the acquisition, rehabilitation, and sale of 415 housing units, the demolition of 1,100 units, and for the acquisition, rehabilitation, and lease of 252 affordable rental units. This type of large-scale planning was, in part, made possible by the need to take a regional, collaborative approach toward market recovery in 20 key areas hit hard by the foreclosure crisis, and combines several common goals of the various stakeholders. All over the country, from Minneapolis/St. Paul, to Chicago, from Philadelphia to Boston, and from Baltimore to Atlanta, we have strong neighborhood community-based organizations looking at the best ways to bring in and employ stimulus monies. Embedded in ARRA, of course, is the myriad of programs that apply to all areas of community development. Nan Roman and Norm Suchar of the National Alliance to End Homelessness look at the $1.5 billion portion of ARRA that funds short- and medium-term rental assistance, housing search assistance, and case management known as the “Homelessness Prevention and Rapid Re-housing Program.” While only a small slice of the stimulus, Roman and Suchar report that, used properly, HPRP can prove to be “a resource that can fund the transformation of homeless assistance that communities have been planning for many years.” The National Housing Trust’s Michael Bodaken examines the dichotomous nature of the “Great Recession”; at once “the best of times” with an administration replete with the best and brightest leading the charge toward a renewed dedication to housing and community development, and the “worst of times” as the Low-Income Housing Tax Credit shrinks to its pre-2007 level (ARRA designates $2.25 billion for LIHTC), leaving remaining tax credit investment concentrated in the coastal regions, and leaving Midwest, Great Plains, and rural states—those areas hit hardest by the effect of subprime debt—in the lurch. Deepak Bhargava and Seth Borgos of the Center for Community Change have a slightly different take, looking at the political realities of ARRA, it’s quick enactment, and the not-so-nascent notion that more stimulus is probably needed. While they acknowledge ARRA’s beneficial impact on community organizing, they attest that the stimulus is “a hodgepodge of programs and initiatives with no pretence to consistency or cohesion. “Procedurally, it was drafted with minimal input from grassroots constituencies and little thought to their role in implementation,” Bhargava and Borgos write. There is little doubt that these stimulus funds present opportunity for the community development field, from the chance to transform America’s carbon footprint, as Enterprise’s Doris Koo writes, to finally moving “beyond the current homeownership funding mechanisms and build quality, long-term assets for our communities,” as Roger Lewis of the National Community Land Trust Network writes, to creating opportunities for people to live in affordable homes while improving their own lives and communities, according to NeighborWorks’ Kenneth Wade. Whether groups can come together, cooperate, and compromise to achieve best use of the funds is still in question. While this is the first administration in many years to clearly care for the well being of cities and all the people who live in them, heaven, and not the devil, is in the details. These essays are just the beginning, of course. Over the next year and beyond, Shelterforce will track the outcomes of the stimulus, the foreclosure crisis and how it’s laying waste to our inner city and poor rural communities, and the new directions being promoted by the administration, while assessing whether the rules of the game for community development are being changed. 2009-11-21T07:00:16+00:00 http://www.shelterforce.org/article/the_stimulus_making_sense_of_it_all/the_stimulus_making_sense_of_it_all/#When:07:00:16Z http://feedproxy.google.com/~r/Shelterforce/~3/X-zpRZsc_0Q/ http://www.shelterforce.org/article/high_stakes_deal_turns_precarious/high_stakes_deal_turns_precarious/#When:07:00:16Z In 2006, Shelterforce reported on the $5.4 billion sale of two colossal apartment complexes—Stuyvesant Town and Peter Cooper Village—on Manhattan’s east side, representing the biggest real estate deal in U.S. history, as well as an era of loose credit and speculation. The deal was a triumph for the highest bidder, Tishman Speyer Properties, and ushered in an era of insecurity for the residents of the 11,232 apartments (more than half of which are rent regulated) that compose what is considered one of the last remaining middle class enclaves in Manhattan. The sale, residents worried, would continue a citywide erosion of rent regulations. But now, Tishman is at risk of default, with the 80-acre property having lost more than half its value. Tenants are unlikely to face rent increases or evictions, according to The New York Times, but they could face a protracted period of reduced maintenance. One other note: the New York State Supreme Court ruled in October that the owners of Stuy Town and Cooper Village had illegally raised rent and deregulated thousands of apartments. According to NYT, A rent-stabilized 2BR is roughly $1,300 a month, whereas the average market-rate two-bedroom apartment there can fetch $3,179. Shelter Shorts 2009-11-21T07:00:16+00:00 http://www.shelterforce.org/article/high_stakes_deal_turns_precarious/high_stakes_deal_turns_precarious/#When:07:00:16Z http://feedproxy.google.com/~r/Shelterforce/~3/FRMMUZSHyzE/ http://www.shelterforce.org/article/once_a_landmark_always_a_landmark/once_a_landmark_always_a_landmark/#When:07:00:12Z The Winthrop, a grand hotel converted to affordable housing in the 1970s, was at the center of a conflict between the city’s hopes for a “revitalized” urban core and the residents of 190 low-income apartments who called the Winthrop home. At 6 a.m. on a Monday morning, most places in downtown Tacoma are still hours from opening, but throughout autumn 2006, one coffee shop in this port city on Washington State’s Puget Sound opened early for a thriving community discussion about a single building that has, for more than 80 years, served as an anchor to the downtown. Built in the 1920s, that building, the Winthrop, was born because Tacomans believed they needed a four-star hotel to live up to the city’s self-proclaimed moniker—the City of Destiny. The moniker came about when Tacoma was the terminus of the northern transcontinental railroad, a short-lived status as the line was soon extended to Seattle. With so much activity and population shifted to their neighbor to the north, Tacoma lacked the development that would bring big city amenities like a luxury hotel. The 12-story brick building named for Theodore Winthrop, an explorer whose 1850s travelogue sparked interest in settling the Sound, was erected in the heart of Tacoma’s Theater District and, thanks to its scale, beauty, and age, defines the neighborhood. But while Tacomans wanted a luxury hotel, travelers weren’t interested, and the Winthrop struggled to make money. With two neighboring miltary bases and the massive Port of Tacoma, the city’s residents were largely blue collar, but their jobs weren’t downtown. Residents, businesses, and retail left downtown for malls and suburbs in the 1960s; jobs moved to Seattle and residents began commuting up Interstate 5; and downtown Tacoma emptied. With very little downtown, let alone travelers, the hotel was converted to federally subsidized housing in the 1970s. It has stayed that way for nearly 30 years. How much longer those rooms could house low-income residents was on the minds of everyone crowded into Tully’s coffee shop at 6 a.m., directly across the street from the Winthrop. The city had been working for more than a decade to revitalize its urban core, with new museums, restored theaters, a convention center, condos, and a new branch campus of the University of Washington. Connecting it all together was a new light rail line. Its northern terminus in the Theater District just happened to be at the Winthrop’s doorstep. So in 2003, when Winthrop owners decided to put the building on the market, there was serious concern among affordable-housing advocates that redeveloping the Winthrop would mean the loss of the 190 subsidized housing units in the building. According to the contract with the Department of Housing and Urban Development (HUD), the subsidies were tied to the Winthrop itself, not the current residents and families. Additionally, transferring those credits elsewhere would involve transferring them all to a single building; splitting the credits into multiple projects was not an option according to HUD’s strict interpretation of the law governing the contract. This strict interpretation left affordable housing agencies in a bind. It was unlikely any agency could build another 190-unit project in Tacoma. Which meant that if the Winthrop were sold and redeveloped as condos or as a hotel they would either have to change the law or lose the credits, an option that would put the residents back on the already long housing waiting list. The Tacoma Housing Authority (THA) attempted to prevent the problem entirely by purchasing the building before any other developer. Peter Ansara, the THA executive director at the time, tried and failed to secure the building. The Winthrop stayed on the market. Three years later, affordable-housing developer AF Evans secured an option to buy the Winthrop. It proposed fixing badly needed maintenance and structural issues, restoring the building’s grand Crystal Ballroom, and mixing in some market-rate units into the building. But in order to make the project viable, they asked for a $1 million loan from the City of Tacoma. This opened up the debate over the future of the Winthrop to the public, and thus political, sphere. Mayor Bill Baarsma, a retired college professor at the University of the Puget Sound in Tacoma, saw that the AF Evans purchase would effectively rule out the Winthrop ever becoming a hotel again. He lobbied the City Council to reject the request for the loan, and called for a developer to restore the Winthrop as a hotel, harkening back to Tacoma’s relationship with the building. And it wasn’t just Baarsma: a large number of Tacomans wanted to see it restored out of civic pride, the building representing to them a final piece of Tacoma’s self-image as a city pulling itself up by its own bootstraps. Heeding Baarsma’s call was Tim Quigg, owner of a local construction firm. He called the early morning public meeting at Tully’s and invited all the stakeholders. Crowded into the coffee shop, he pitched his plan: the community could restore the building as a grand hotel and build new affordable units for the displaced tenants, if everyone was willing to work together. “All real work happens before 8 a.m.,” Quigg told the bleary-eyed crowd. Loaded with too much coffee and packed tightly together in the small space, the crowd easily picked up his energy. With the hope of a restored hotel, the Tacoma City Council voted against the $1 million loan to AF Evans, effectively cutting off their ability to buy the Winthrop. They had put all their eggs into Quigg’s basket. The coffee shop meetings were open to tenants of the Winthrop, though only a small handful attended. Glenn Grigsby, a resident of the Winthrop for 15 years, spoke regularly to the crowd of officials and activists in the early morning coffee shop meetings. He favored the transition of the Winthrop to a hotel and wanted to see the residents and families spread out to “three or four or even five locations with 40 people in the community instead of 200.” His biggest worry was that “there would be less low income housing [if the Winthrop were redeveloped]. I am so grateful for HUD and Section 8,” he said, “It has helped me tremendously.” Although the coffee shop meetings were fruitful for establishing principles that all sides could get behind, Quigg ultimately could not bring together the needed financing for the project. Instead, another developer, Prium Companies swooped in and bought the Winthrop, pledging to the residents and stakeholders that they would follow the vision the community had laid out. In a small twist of irony, the CEO of Prium was Peter Ansara, who had tried and failed to acquire the hotel as the director of the Tacoma Housing Authority three years earlier. Meanwhile, Michael Mirra at the Tacoma Housing Authority worked with U.S. Sen. Patty Murray to pass legislation that would allow the residents to be transferred to two or more projects instead of a single project. They were also able to pass a law allowing for an alternate voucher plan that gave residents the ability to move from the Winthrop to anywhere in the country when the HUD contract on the building expired. When asked if the community discussion in the coffee shop and the subsequent plan for the Winthrop had been successful, Mirra cautiously responded, “The story is not far enough advanced to answer the question.” Mirra remained hopeful, saying that Prium’s purchase of the building “was an act of civic patriotism.” But that was in May 2008. Since then, Prium Company, like many developers, has been hit by the financial crisis. The City of Tacoma has worked with Prium to identify a parcel of land just south of downtown Tacoma for the developer to build the new affordable housing units, but the permits have not been issued and no work seems likely to start. Prium approached Mirra and the THA in June 2009 to see if they were interested purchasing the building. Mirra’s response, as quoted in The News Tribune, was “We remain interested but uncertain.” Thanks to the deep recessions and long road to recovery ahead, restoring the Winthrop Hotel might still be an impossible task. But when balancing the difficult choices between gentrification and affordable housing, Tacoma attempted to manage the problems as a community, gathering to talk about the issues— all over a simple cup of coffee. Organize! 2009-11-21T07:00:12+00:00 http://www.shelterforce.org/article/once_a_landmark_always_a_landmark/once_a_landmark_always_a_landmark/#When:07:00:12Z http://feedproxy.google.com/~r/Shelterforce/~3/YKztLUocAyY/ http://www.shelterforce.org/article/the_nitpickers_guide_to_foreclosure_mitigation/the_nitpickers_guide_to_foreclosure_mitigation/#When:07:00:08Z First, it was judges like Justice Arthur M. Schack of the New York Supreme Court, who made waves by tossing foreclosure motions because he found a rising level of errors in bank paperwork, largely due to banks’ slicing and dicing nature of selling mortgage loans to outside investors. But now, it’s the homeowner that has made it hard on the bank trying to foreclose. In a semi rebellion known as “show me the note,” banks are being challenged, ever so slightly, when they find themselves legally required to prove that they hold the original mortgage documents before taking possession of a home. However, it’s basically a means to buy some time. “I am encouraging [homeowners] to stay in their homes [and] go through the court proceedings until the institution in question can produce [the] note,” Ohio Rep. Marcy Kaptur told the Huffington Post in September. Further, there are only a handful of states, including Florida and New York, that require foreclosures to go before a judge. Shelter Shorts 2009-11-21T07:00:08+00:00 http://www.shelterforce.org/article/the_nitpickers_guide_to_foreclosure_mitigation/the_nitpickers_guide_to_foreclosure_mitigation/#When:07:00:08Z http://feedproxy.google.com/~r/Shelterforce/~3/qNDge69zlb8/ http://www.shelterforce.org/article/what_does_the_future_hold_for_fannie_freddie/what_does_the_future_hold_for_fannie_freddie/#When:03:53:56Z In September 2008, on the precipice of the economic crisis finally catching up with Wall Street, Treasury Secretary Henry Paulsen, Federal Housing Finance Agency Director James Lockhart and Federal Reserve Chairman Ben Bernanke converged on Fannie Mae’s and Freddie Mac’s boardrooms—and they were not in a good mood. The world credit markets were in free fall, and Fannie Mae and Freddie Mac, together holding more than half of all the mortgage debt outstanding in the US market, were reeling from unprecedented losses from plunging real-estate values, rapidly escalating delinquencies in their single-family portfolios, and a sudden lack of interest in their debt securities around the world. The G-men told the two boards that they could either make it hard or make it easy, but before the meetings were over, both would turn over the reins of their companies to Director Lockhart. And just like that, institutions born during the last great mortgage crisis of the 1930’s to ensure that lenders and consumers always had access to capital for mortgages were out of business. The privately owned, high-flying companies that once were Wall Street darlings and charmed investors from Peking, Illinois to Beijing, China were finished, turning over majority ownership to the US Government in return for more than $80 billion in funding to keep the two companies solvent. How did this happen, and why does it matter? What, if anything, will be built to replace the two companies whose investments fueled the biggest homeownership growth in history? And why should advocates and activists who fight for working families and their communities care? The Federal National Mortgage Association was chartered in 1938 to issue US government debt and to use it to buy mortgages insured by the FHA, which four years earlier had launched the first long-term, fixed-rate, self-amortizing mortgages through its insurance authority. Before this, homebuyers had only two basic choices in financing their homes: pay cash or get a short term, interest only loan that had to be rolled over through a refinancing, usually every five years. FHA insurance placed the government’s guarantee behind 20 year, fixed-rate, self-amortizing mortgages, establishing for the first time the financing model of choice for housing consumers for the next 75 years. But without some effective secondary market, lenders would quickly reach the limit of their ability to hold such long-term paper. The new agency’s job was to buy up these mortgages from the lenders, and resell them where possible to private investors, to provide new capital and use the federal government’s own balance sheet to absorb the risks if necessary. This new model worked, and worked well. Especially after World War II, when the US economy boomed and millions of demobilized servicemen returned to resume their lives and start families, mortgage lending through FHA and later VA mortgages boomed, too. In 1954 Congress adopted a mixed ownership model for the company. The US Treasury retained nonvoting preferred stock in the company and lenders selling loans to Fannie Mae were required to buy nonvoting common. In 1968 Fannie Mae was fully privatized with the sale of the Treasury’s preferred stock and its transition to private shareholder ownership with a national charter, was complete. The newly-formed Department of Housing and Urban Development (HUD) retained a new entity, the Government National Mortgage Association (Ginnie Mae) to provide liquidity for government guaranteed home loans, primarily those backed by FHA and VA and provide liquidity for special government-sponsored mortgage programs. Fannie Mae in its new, private form developed into the dominant secondary market actor for the conventional market, although it could and did purchase government guaranteed loans in some amounts. In 1970, the secondary market was expanded with the addition of the Federal Home Loan Mortgage Corporation (Freddie Mac). Freddie Mac was capitalized through the sale of $100 million in stock to the 12 Federal Home Loan Banks. Freddie Mac was designed, and operated for more than a decade, as the secondary market arm for the Home Loan Bank system, and was housed within the Federal Home Loan Bank Board, which was the Federal Home Loan Bank system’s overseer. When the Board was reorganized after the collapse of the S&L industry in 1989, Freddie was privatized, too, with the same charter as Fannie Mae. Give and Take The companies’ peculiar status as government sponsored enterprises (GSEs) stems from their unique congressional charters. Other institutions, like national banks, also have national charters that trade certain benefits for specified obligations and have long been used to encourage private participation in meeting public ends. The Fannie and Freddie charters provide a clutch of valuable terms: exemption from state and local income taxes; exemption from registering their debt and equity securities with the SEC (although both agreed voluntarily to register their equities with the SEC in 2002); special treatment of their securities held by regulated banks; access to the Fed window; and a Treasury line of credit for $2.25 billion in case of a liquidity crisis. An additional benefit that arose from their charters was the ability to borrow money only slightly more expensively than the US Treasury, based on the “implicit guarantee” provided through their charter relationship to the US Government. In return for these benefits, the companies have limitations and obligations: business is restricted to the secondary market in residential mortgages; they cannot operate outside the United States; they are expected to operate in all markets, at all times; and they were given specific percent of business goals to lend to low- and moderate-income borrowers and underserved communities. In 1992 and again in 2008 Congress adopted oversight provisions and terms that govern their capital and safety and soundness, assigning “mission” oversight to HUD and safety and soundness oversight to a new agency, OFHEO. In 2008 these functions were consolidated into the new FHFA. Despite their special status, until the September 2008 takeover neither company had ever received any direct federal funding after their privatization. But under 2008 revisions to their charters, both could be placed in conservatorship by their regulator to protect their safety and soundness. It was this authority that was invoked at the September meetings with both companies’ boards. The development of this system served a number of basic and vital functions in the mortgage market. One is liquidity. Fannie and Freddie insured a reliable source of financing for mortgages that did not depend on a lender’s access to deposits. A closely linked function is stability, achieved both through ready liquidity and a growing standardization of mortgage terms. Third is access, for communities and borrowers across the country and in all times. Fannie’s and Freddie’s ability to attract investments across the yield curve and manage the extensive duration risks of holding long term assets enabled them to make 30 year, fixed rate mortgages available to any buyer. What’s My Line? Fannie and Freddie carried out a number of distinct but related businesses. Financed through the issuance of debt, the companies’ portfolio businesses originally were used to purchase whole loans directly from lenders. But over time as securitization became more and more important, the portfolios also purchased mortgage-backed securities, both their own and those issued by others, like Wall Street banks. The far larger business of guarantee fees accelerated with the growth of the market for mortgage-backed securities in the 1990s. In return for providing a guarantee of the timely payment of principal and interest to the investors who buy Fannie Mae and Freddie Mac mortgage bonds, the companies charge lenders a fee, which is passed on to borrowers. These assets are not held on the companies’ balance sheets, although they must hold reserves against loan losses, and these fees continue throughout the life of the loan and are collected through the borrower’s monthly payment. While both companies also developed other fee generating business, notably in technology as they developed automated underwriting systems, their principal businesses are the portfolio and the guarantee businesses. 2009-11-21T03:53:56+00:00 http://www.shelterforce.org/article/what_does_the_future_hold_for_fannie_freddie/what_does_the_future_hold_for_fannie_freddie/#When:03:53:56Z http://feedproxy.google.com/~r/Shelterforce/~3/UFJ8pxf2lf4/ http://www.shelterforce.org/article/a_balance_of_discipline_and_flexibility_is_key_to_cdc_efficacy/a_balance_of_discipline_and_flexibility_is_key_to_cdc_efficacy/#When:03:41:57Z What do CDCs need? And what do our communities need from community development corporations? How can we, as practitioners, help the community development field excel, be better understood, and gain needed federal resources to conduct its work at this critical time? The continuing effects of the nation’s foreclosure crisis requires a competent and ready nationwide delivery mechanism composed of organizations that are used to thinking in a systemic way to get results at the local level. There is much work to do to rebuild neighborhoods, which are the roots of opportunity for families as well as the economic building blocks of cities and regions. This work should encompass energy efficiencies (green and transit oriented) for long-term impact and savings. As Joe Kriesberg states in his piece, “all community developers share a set of values rooted in social, racial, and economic justice,” and for the last three decades, CDCs have exhibited just that: becoming best known for their affordable housing work in that social, racial, and economic context. CDCs are, in fact, community revitalization experts, employing community planning, housing and commercial development, neighborhood organizing and advocacy, community financing, human services and human capital development, greening and beautification, and dozens of other tools to bring about sustainable change in some of the country’s most disadvantaged areas. But as we move further into the 21st century, and as we address the ever changing needs of our communities, particularly in these economically challenging times, we need to aggressively analyze how the CDC model has changed since the 1970s. In doing so, we should examine specifically what many consider to be an over-emphasis on housing; create a resource base for concerns related to the community development field; move away from project-based development; engage in a discussion of existing funding structures (such as NSP), which are more bricks-and-mortar based and not operational based. Moreover, we need to define the community development field in terms of impact and organizational structure and look at CDCs more as facilitators of development and not just developers. The National Alliance of Community Economic Development Associations (NACEDA) has proposed the creation of cohesive identity for community development, including expanding the model of unification, with an eye toward regional collaboration to increase the efficacy of a particular campaign. We can do this, but we need to know that there are reliable funding sources available to solve the problems that are facing our communities. This is why a working capital fund for the community development field is necessary and should draw on the various agencies whose missions CDCs support: HUD, USDA, OCS, DOT, DOL, VA, and HHS. A recent goal has been to work toward getting HUD to direct states in the distribution of HOME funds to set aside 5 percent for community housing development organizations (CHODOs). NACEDA has also found a lead sponsor for the Community Development Preservation Act, a bill that would achieve the same goal of needed funds available for community-based development organizations for core operating support to allow an organization to stay in business and to prepare and to adapt for the future. The funds would be distributed through HUD using a single application process, which would improve overall efficiency and reduce overhead for those organizations applying while also streamlining the decision-making, accountability, and monitoring activities of the administration. The availability of reliable and stable funding would allow the strongest CDCs with the boldest and best plans to be free to focus on actually carrying out the difficult, but imperative work of rebuilding the distressed corners of America. There are too many projects to list here that would benefit from a working capital fund, but one project of note is taking place in Somerville, Mass., a city of nearly 80,000 just north of Boston where Boston’s Green Line service is expanded and two new stops on the Orange Line have been added. About 55 percent of the city will be within a half mile of a new station, and of course, new development will follow. To ensure that this new construction maximizes the sustainability, livability, economic, and equity dividends possible from such an infrastructure investment, Somerville Community Corporation (SCC), led a community planning process, performed a detailed land-use survey to allow strategic investments to be identified and put in place. Sommervile is a CDC that works on both affordable housing development and homeless prevention services. The planning process drew on SCC’s existing network of partners in relevant areas, including housing, transit planning, open space, health, and environmental law. They expect to be working with the city on both zoning and related policy and identifying key parcels for acquisition and equitable mixed-use development. The funding for the Somerville transit-oriented development (TOD) planning process was private, though implementation of various portions will involve state and federal funds from many areas, including homeless prevention, DOT, and CDBG. SCC Executive Director Danny LeBlanc says that the availability of working capital will be essential in order to achieve effective implementation of the strategic TOD plans. When an already hot market heats up around an impending improvement such as expanded transit, he notes, it’s nearly impossible to keep pace with it if you need to secure funding after parcels are identified for purchase—especially true in a place like Somerville that is nearly fully built out with small properties: “Working capital would allow us to act quickly and aggressively in the market, being there, being able to act quickly, is key to being able to maintain affordability.” Though most of the country is not facing a hot market at the moment, the same dynamic applies to CDCs who are attempting to use NSP funds to secure strategic parcels for revitalization in distressed neighborhoods—they are in competition with remote speculators who have both liquidity and no intention of responsible disposition (and therefore no need to make their purchases “pencil out”). Allowing CDCs the ability to move quickly with a flexible source of capital in every market could mean the difference between success and failure, opportunity and exclusion, and making the most of funding and paying too much for properties with marginal importance. 2009-11-21T03:41:57+00:00 http://www.shelterforce.org/article/a_balance_of_discipline_and_flexibility_is_key_to_cdc_efficacy/a_balance_of_discipline_and_flexibility_is_key_to_cdc_efficacy/#When:03:41:57Z http://feedproxy.google.com/~r/Shelterforce/~3/iLTyQZXy3_8/ http://www.shelterforce.org/article/more_than_words/more_than_words/#When:03:16:09Z Over the past few months we’ve gotten a clear indication of how the Obama administration approaches community development. They have articulated a comprehensive placed-based strategy embedded in a regional framework—a way of working that says no single action by itself can change a community. Revitalization requires that decent jobs, schools, and homes must be available. Crime needs to be under control and it has to be possible to go from one place to anther affordably and efficiently. OK, that’s not news. And the Obama administration isn’t the first to promote a comprehensive strategy for community revitalization. So what’s different now? For one thing, all of the key officials that can put substance behind rhetoric actually have first-hand experience in community development, some have even battled the very bureaucracies they now lead. And the administration has put its money where its mouth is. Take a look at the second Neighborhood Stabilization Program in this year’s American Recovery and Reinvestment Act and compare it with the first NSP in the Housing and Economic Recovery Act of 2008. Both programs have their flaws, but NSP 2 requires and rewards a comprehensive and collaborative approach. It’s an approach that permeates every part of the administration and may become the standard operating procedure for federal agencies: a cross-silo, collaborative, evidence-based approach to developing, implementing and funding programs. Just take a look at the August 11 memo (www.nhi.org/go/whmemo) sent jointly by the heads of the Office of Management and Budget, the Domestic Policy Council, the Office of Urban Affairs, and the National Economic Council entitled “Developing Effective Placed-Based Policies for the FY 2011 Budget.” Now the difficult part comes. How do we replace a system built on categorical funding and narrowly defined programs and outcomes? And how to you provide both the framework to do this and the funding to support overburdened nonprofits and communities? The Livable Communities Act (S. 1619), making its way through Congress now, is one very important step. If passed, it will provide incentive and funding to support this agenda, including the establishment of the Interagency Council on Sustainable Communities. Another vital step, is having people like Xavier de Souza Briggs, known and respected by many in the community development field, in a position to refine and guide the agenda forward. Briggs is the Associate Director for General Government Programs at OMB. He describes some of the thinking behind, implementation of, and challenges to this new agenda in an exclusive Shelterforce interview (page 8). The CDC Challenge Briggs is a powerful advocate for community development, but he also lays out a few challenges to the field, challenges that CDCs must meet to remain relevant, strong and successful. Some of those challenges are examined by Joe Kriesberg, the executive director of the Massachusetts Association of CDCs, in his article, “A 21st Century Vision for Community Development” (page 12). His article begins a series of features that will examine the roles of CDCs, the strengths and weaknesses of the model and the changing conditions that CDCs find themselves in. We’ll also, in the coming year, look at the tension between the kind of placed-based work practiced by CDCs and the metropolitan strategies supported and encouraged by the administration. NSP 1, NSP 2, ARRA, HERA, TARPÉ Beginning on page 30, we start looking at how communities use stimulus dollars to create equitable and sustainable change. Is the stimulus, along with the 2010 budget funding, allowing for the implementation of real neighborhood preservation strategies? Are communities forming enduring collaborations, or are they collaborating to satisfy grant requirements? To set the stage, we’ve asked 11 leaders in the community development world to weigh in on the stimulus, how it plays out in our communities, and how it needs to improve. We round out the issue with Barry Zigas’ in-depth look at Fannie Mae and Freddie Mac; the affects of the foreclosure crisis on minority households by Daniel McCue of the Joint Center for Housing Studies and how to construct a more rational housing mortgage policy by Reid Cramer of the New America Foundation. Coming Up In December we will publish a double issue that, for those of you keeping track, will put us back on schedule. Our lead feature will be in an interview with Shaun Donovan, HUD Secretary. We’ll follow up on the themes of this issue and start some new ones. Publisher's Note 2009-11-21T03:16:09+00:00 http://www.shelterforce.org/article/more_than_words/more_than_words/#When:03:16:09Z http://feedproxy.google.com/~r/Shelterforce/~3/-N2H4AwiDDc/ http://www.shelterforce.org/article/taking_action_against_wage_theft/taking_action_against_wage_theft/#When:06:00:57Z Starting in the 1980s, the Justice for Janitors campaign confronted global real estate conglomerates that hid behind cleaning subcontractors who paid subminimum wage to immigrant workers cleaning the most exclusive office buildings in the country. Now, 20 years later, we are exposing how Bank of America’s tellers are forced to work off the clock, and are denied overtime pay. With unemployment rising and the economy locked in recession we can count on corporations to look for every opportunity to evade, avoid and violate laws designed to protect workers. In almost every union organizing campaign I have been involved in over the last 30 years, wage theft—the failure to pay what is required by law—has been a major issue. Before we get to negotiating for higher wages and health care, we have to address all the ways employers are ripping off workers to avoid meeting minimal legal requirements. Wage theft schemes that started with the most vulnerable and powerless workers, like farm workers and garment workers, have now spread throughout the economy. White-collar professional employees are now unilaterally declared “managers” as a way to avoid paying overtime, allowing employers to increase hours dramatically without increasing pay. Kim Bobo’s new book, Wage Theft In America (The New Press, 2009), lays out in painful detail the breadth and scope of the problem, and how the Labor Department has completely failed in enforcing the law and protecting workers. Whole sectors of the economy have felt the squeeze. Take a look at residential construction, for instance, where you have workers being paid off the books as a result of being misclassified and called “independent contractors.” Theft is also systemic: built into an economy that forces workers to compete for low-paying jobs while providing for a legal system that rewards and protects giant corporations who hide behind layers of outsourcing and subcontracting. The labor department and other regulatory agencies on a federal and state level have totally failed in their responsibility to enforce the law. By putting this in a religious and economic context, Kim Bobo makes it clear that this is both morally unacceptable, and bad for the economy. With millions of workers robbed by their employers and with $19 billion stolen through nonpayment of overtime wages per year, wage theft devastates individual workers, impoverishes whole communities and starves cash strapped governments from needed revenue by operating outside of the workers compensation and unemployment systems and is often part of evading taxes altogether. This is a growing crisis for workers and the country and Wage Theft in America is a call to action with a series of specific proposals. Kim Bobo argues for three core elements of a strategy to address wage theft: Supporting Unions: Making it easier for workers to form unions and supporting their efforts to organize enables workers to negotiate contracts with grievance procedures that allow workers to raise wages above the minimum wage and use their union contract to stop wage theft. Expanding Worker Centers: Workers centers play a critical role in organizing and defending workers who work in parts of the economy unions often aren’t organizing in and where abuses are often the most extreme. Strengthening the Labor Department: Hire more investigators, create vehicles for community wage and hour policing, wage and hour partnerships, and expanding worker education about their rights. All of these proposals make complete sense, and they also raise some interesting questions and possibilities of how combating wage theft fits into a broader campaign to challenge how the economy is organized. An Eye for an Eye: Criminalizing Wage Theft There is an opportunity to make exposing and organizing against wage theft a central component of a broader campaign to organize unions, win living wages, and challenge economic and social inequality. Chapter 9 “Punishing Wage Theft” starts to address this question when it raises the issue of punishment for wage theft. “If you rob someone’s house, you will probably go to jail. If you rob someone’s wages…[it’s] a crime, but not a high priority one.” A campaign that explicitly calls for criminalizing wage theft, with jail time for multiple offenses goes to the heart of our two-tiered justice system, and offers a moral platform to organize low-wage workers to win money owed them and to demand systemic changes in enforcement that provide disincentives to stealing by making the punishment fit the crime. Nowhere is this truer then in the case of immigrant workers and day laborers. Because they are often not part of the “formal economy” and are hired on a cash basis for short periods of time by many different small employers and/or individuals, it is almost impossible to imagine how government enforcement or litigation can address the scale or scope of the problem. Only when the individuals who hire and exploit day laborers fear they could be arrested for their crime, because they see others in their community arrested, will we have a real deterrent. Wage Theft In America has many religious quotes, Exodus 21:23�27, which calls for an “an eye for an eye,” and offers further guidance on how to think, talk, and act on the question of wage theft. An “eye for an eye” is often dismissed as being a call for vengeance, but many religious scholars have argued that it is really a powerful call for equal justice and punishment. All individuals, whether rich or poor need to be held accountable for stealing and there shouldn’t be different standards depending on people’s economic status. It is obscene that a poor person goes to jail for stealing hundreds of dollars and corporate executives go free when they steal millions. Absent jail time; refunding stolen wages is just another corporate expense. Enforcing the law; Creating New Laws There are existing laws and statutory authority that could be used to prosecute employers for stealing. Kim Bobo talks about “theft of services” laws that are rarely used by police because wage theft is not considered a priority. District attorney’s, city attorney’s, other law enforcement entities and government agencies could all treat wage theft as a crime if they felt enough public pressure to do so. The challenge is to create that public pressure to enforce existing laws and create the opening to pass new stricter laws. There are three initial steps we could explore in a series of communities around the country as pilot projects. Identify who could enforce the law in local communities. Research who could enforce the law if they chose to and what the maximum penalties could be. This could be city attorneys, district attorney, the local sheriff or some other government entity. We need to figure out who in local and state governments we are putting the heat on to enforce the law. Document thousands of cases of wage theft in specific communities-Mass canvass, house visit, and outreach to identify wage theft in poor communities. In a series of poor communities across the country we would systematically visits and talk to tens of thousands of workers at home, in churches and their communities to document wage theft and organize towards a series of escalating activities demanding arrests and criminal prosecution of individuals who practice wage theft and the denial of various licenses that businesses need to operate if they are guilty of wage theft. Organize and Demand Prosecution. Starting with delegations, to pickets and ultimately sit-ins, focus anger about the theft of millions of dollars in a specific community on the selected government entity or individual that could enforce the law but chooses not to. Pick a couple of key elections and demand of the person running for attorney general or other office put criminal prosecution and three strike jail terms for repeat offenders as part of their platform. Kim Bobo has done a great job of laying out the problem and offering a series of potential steps to take to combat wage theft. The current economic crisis and a growing sense in the country that corporations are getting away with crashing the economy while being bailed out by taxpayers offers the opportunity to go on the offense, demand they be held accountable and ultimately be jailed for stealing. Imagine the wonderful irony of the situation, if police were arresting people sitting in at the police station or the District Attorneys office demanding the police arrest a company official who was engaging in wage theft. The issues and the potential are unending; the real challenge is to get to work, and demonstrate not just that employers are stealing but also that workers are ready to take action to put an end to these abuses. Book Review 2009-11-20T06:00:57+00:00 http://www.shelterforce.org/article/taking_action_against_wage_theft/taking_action_against_wage_theft/#When:06:00:57Z http://feedproxy.google.com/~r/Shelterforce/~3/RB8mMMZ2gKU/ http://www.shelterforce.org/article/occupied_owner_our_lot_by_alyssa_katz/occupied_owner_our_lot_by_alyssa_katz/#When:16:42:01Z Our economy, driven by a culture that values debt, anxiety, and greed, results in a delusion, Alyssa Katz shows in her new book, Our Lot: How Real Estate Came to Own Us (Bloomsbury USA, 2009), that inevitably led to a real estate mania and the collapse of the global economy. To help the reader navigate this complex story, Katz, a journalism professor at New York University, and a former editor of City Limits, has found vivid, outrageous, and sympathetic characters for us to follow. My favorite character is Gale Cincotta, a Chicago housewife and activist, who in the 1970s, helped turn the community organizing group, National People’s Action, into a powerful force that led to the passage of the federal Community Reinvestment Act (CRA) of 1977. The CRA, a brilliantly innovative affordable housing law, forced banks to meet the credit needs of all neighborhoods. It would become one of the most successful government policies to promote homeownership. At the outset of her story, Katz follows Cincotta, one of the few heroes of the book, to help explain how housing is financed in America. Katz counterbalances Cincotta with another great character, Lewis Ranieri. Ranieri, a fierce, a trader for Salomon Brothers and a fierce pioneer of financial services deregulation, had no use for (or knowledge of) regulations like the CRA, or or even of the successful housing programs such as public housing. He certainly was not interested in improving the Federal Housing Administration (FHA) as a way of extending credit to previously discriminated urban households. Instead, Ranieri, partnering with President Ronald Reagans “brain trust,” devised an unfettered free market program to promote homeownership. Ranieri and the Reaganites plan would, according to Katz, “dismantle the regulations of a previous generation—cautious Depression-era strictures on securities trading that were preventing pension funds, insurance companies and other institutionsresponsible for investing billions of dollars in other peoples cash, from poring their wealth into the places where we live.” Ranieri’s program would turn homes into commodities as tradable as stocks and bonds. He called it securitization. Soon, Salomon Brothers and the rest of the financial services industry convinced a Democratically-controlled Congress and Republican-controlled Senate that the combination of securitized mortgages and deregulation was the route to expanding homeownership: everyone would be a winner! Policies 2009-11-12T16:42:01+00:00 http://www.shelterforce.org/article/occupied_owner_our_lot_by_alyssa_katz/occupied_owner_our_lot_by_alyssa_katz/#When:16:42:01Z http://feedproxy.google.com/~r/Shelterforce/~3/Om3DHAtX03Q/ http://www.shelterforce.org/article/publishers_note/publishers_note/#When:19:00:01Z It’s quite a time to rejoin Shelterforce. As we struggle with the pain and despair that comes from the worst economy in decades, fueled by a subprime crisis so many of us saw coming, we also find ourselves in once-in-a-lifetime moment. For the first time in years, we have a chance to change the rules of the game; rules that always hindered and often punished the people and communities we serve. So how do we seize this moment? Let’s learn to play the inside game. At HUD, as well as at many other federal agencies, we have potential partners with open minds and open doors. As we walk through those doors, let’s continue to press for all our needs, while remembering that our new partners have other pressures to contend with. We can help ourselves by helping them make our case. To do that, we need to: Do it right; do it better. Let’s stipulate that the current administration cares about our work and understands its importance. There couldn’t be a better time to take a careful, reflective assessment of our methods, accomplishments, and failures. No longer is it enough to say we do important work, though true, or that we have never been supported at the level required, though also true. We need to do our work well. We need to adapt, build new alliances, innovate, and create permanent change beyond the borders of our neighborhoods. Prove it. A few years ago, the MacArthur Foundation announced a $25 million dollar housing research program based on the firm belief that facts drive policy. Now we have an administration familiar with the term “fact.” We need to document our work and show how it can and does bring benefits to everyone. And we need to drive the efforts to create new public policies, at all levels of government, which will support our communities. In the coming year we will be looking at the changing field of community development, the impact of the stimulus on our work, and the impact of our work on public policy. We hope that you continue to find Shelterforce and our online media useful as we move through uncharted territory. Editor's Note 2009-06-03T19:00:01+00:00 http://www.shelterforce.org/article/publishers_note/publishers_note/#When:19:00:01Z http://feedproxy.google.com/~r/Shelterforce/~3/0HqSop-7WUg/ http://www.shelterforce.org/article/publications_and_resources/publications_and_resources/#When:19:00:01Z Reinventing Transit: American Communities Finding Smarter, Cleaner, Faster Transportation Solutions, released by the Environmental Defense Fund, showcases 11 case studies of existing, innovative public transit across the country. An Engine of Opportunity: A User’s Guide to Advocate for Transportation Equity in the 2009 Recovery Act, a joint release from PolicyLink and Transportation Equity Network, written by Radhika Fox and Solana Rice, aims to identify who benefits from the $50 billion allocated for infrastructural improvements in the 2009 American Recovery and Reinvestment Act, and who decides how those monies are used. The Challenge of Foreclosed Properties, a study released by Enterprise, written by Amanda Sheldon, Phillip Bush, Aaron Kearsley, and Anne Gass, examines the rapid increase in foreclosure rates, and offers an analysis of the $3.92 billion Neighborhood Stabilization Program and how state and local plans implement the HUD allocation. The report concludes that NSP funds are being directed toward innovative and effective programs, though states that longer-term analysis will ultimately offer a final grade on NSP efficacy. Property Disposition: Exploring Different Approaches for Preserving Affordable Housing Opportunities, released in March by the Office of the Comptroller of the Currency (OCC). This report describes how banks and their partners in the community are working to dispose of foreclosed properties in creative ways that will preserve affordable housing opportunities and stabilize communities. The report reviews initiatives and strategies for building partnerships between banks and nonprofit organizations, for-profit affordable housing developers, government entities, and others. Decade of Neglect Has Weakened Federal Low-Income Housing Programs, by Douglas Rice and Barbara Sard, and released by the Center on Budget and Policy Priorities*, addresses the large and growing number of low-income renters facing unaffordable housing costs. The report points to how recent funding shortfalls and policy changes have hurt federal housing programs, and outlines a series of steps to make housing more affordable for low-income families. Beltway Burden: The Combined Cost of Housing and Transportation in the Greater Washington, DC Metropolitan Area, from the Urban Land Institute’s Terwilliger Center, in partnership with the 8Center for Housing Policy* and the Center for Neighborhood Technology, measures the combined housing and transportation costs for 22 areas within the Washington region, and finds that increases in transportation costs start offsetting housing savings when families locate roughly 15 to 17 miles from employment centers. Post-Foreclosure Community Stabilization Strategies: Case Studies and Early Lessons, prepared for NeighborWorks America by Anne Gass, presents 14 case studies concerning community development corporations, that, either by themselves, through intermediaries, or through regional public-private partnerships, have participated in the sort of large scale solutions that, the study argues, will be required to restore neighborhood housing markets to equilibrium. Revisiting CRA: Perspectives on the Future of the Community Reinvestment Act, a joint publication of the Federal Reserve Banks of Boston and San Francisco, is a series of articles and essays offering different perspectives on the past and future of the CRA in an effort to provide facts, and highlight possible reforms. Access 2009-06-03T19:00:01+00:00 http://www.shelterforce.org/article/publications_and_resources/publications_and_resources/#When:19:00:01Z http://feedproxy.google.com/~r/Shelterforce/~3/WHZ5gleMfp8/ http://www.shelterforce.org/article/organizing_lessons_from_allen_parkway_village/organizing_lessons_from_allen_parkway_village/#When:19:00:01Z When Lenwood E. Johnson, the son of Texas sharecroppers, moved into Houston’s Allen Parkway Village project housing, the Freedmen’s Town section of the city had yet to be designated historic, and the village had yet to be saved. By the end of the 1990s the village was preserved, and Johnson proved to be something of an unlikely hero here in Houston’s fourth ward, historically one of the poorest sections of the city, but always ripe for redevelopment because of its proximity to the downtown. Opened as San Felipe Courts in 1944, the 1,000-unit Allen Parkway Village (APV), whose namesake is the parkway named for Houston founders John and Augustus Allen, was the crown jewel of the Housing Authority of the City of Houston (HACH) and the largest one in the South. As APV aged, Houston property developers began eyeing the 37-and-a-half acres of prime inner-city real estate that it occupied—an area where freed slaves settled after the Civil War. The developer’s lust for the land can be traced back to November 1977. HACH’s director Robert Wood crafted a letter proposing demolition to the Department of Housing and Urban Development claiming that the APV land values had escalated “beyond a cost where housing is the highest and best use.” In 1979 Houston Mayor Jim McConn’s Urban Policy Board blamed the state of public housing on the city’s lack of leadership, which they found “inexcusable in the midst of such wealth and well-being.” McConn’s board wrote that the city had no “central single focus for dealing with housing issues.” Allen Parkway Village residents were given some hope that their decaying project would be rehabilitated when HUD authorized $10 million dollars to modernize it in 1979. Unfortunately, HACH failed to spend the money to revitalize the project. Congressional hearings held nearly 15 years after the HUD authorization revealed that roughly $8.6 million of the fund was untouched. Of the remaining $1.4 million, HACH had receipts documenting $700,000 used for repairs, but the rest of the cash disappeared. The remaining $8.6 million of the original $10 million from 1979 was used when the renovations began in 1996 (though the residents filed a Federal Injunction in 1991 that stopped the Housing Authority’s request to HUD to use the remaining $8.6 Million for other programs). But long before that fact was disclosed, Johnson was continually bothered by the decaying condition of the housing project. He began to organize. Johnson became the mastermind organizer of the struggle to save APV. He always held the moral high ground because of Houston’s paucity of public housing. The tenants elected Johnson as the president of the APV’s Residents Council in 1983. By 1984 the Houston City Council passed a resolution approving the HACH plan to raze APV. Local and regional HUD offices approved the plan in 1985. During the fight Johnson used several tactics and strategies to stop the destruction of APV—strategies that included empowerment, education, coalition building, litigation, and legislation. Johnson told Shelterforce that his most important strategy was teaching the residents that they could gain the power to help themselves. After that, Johnson and his supporters were able to use the courts to stall the demolition. Lawsuits allowed the facts to become public information and kept the issue in the media. Once the residents got into federal court they could conduct discovery to produce facts that would support their cause, Johnson remembered. “Legislation was useful but without support from people it fails,” he said. After Johnson organized the residents, he turned to non-residents including credentialed members of the community. Johnson’s allies convinced San Antonio U.S. Representative Henry B. Gonzalez, from Texas’ 20th District, to hold a Housing and Community Development subcommittee hearing in Houston about the proposed APV demolition. After the October 1985 hearing Gonzalez ordered the General Accounting Office to launch an investigation into the APV plan and a similar plan to raze public housing complexes in Dallas. Gonzalez also asked then-HUD Secretary Samuel Pierce to withhold a decision until more hearings could be held. Gonzalez’s actions stalled the city’s demolition plans. Although the APV residents got Gonzalez on their side they could not get any support from their own Congressman, Mickey Leland, despite the fact that the public housing issue fit with Leland’s public persona as a champion of the poor. His record in Congress included co-sponsoring a bill that created the House Select Committee on Hunger. In 1985 he was elected to the chairmanship of the Congressional Black Caucus. He pushed for affirmative action in broadcasting, led initiatives that created the National Commission on Infant Mortality, and visited soup kitchens and homeless encampments. But Leland, for his own reasons that, Johnson says, were in the interest of the property developers, did not champion the APV cause. Meeting requests made by the Coalition for Homeless of Houston and the Committee in Defense of Allen Parkway Village were also ignored. Leland left himself politically vulnerable by not taking up the APV cause. His inaction on the controversy did not square with his activist reputation and legislative record and many of the APV residents who faced displacement were African American, as were Leland and Johnson. In addition, APV sat in the most historic black neighborhood in Houston, which left Leland vulnerable to attacks by Johnson and his surrogates. Leland had spoken about the homeless issue, yet here, in his own district, were residents facing the threat of eviction and homelessness. Johnson came up with a tactic that pressured Leland to act. It would prove to be the most important turning point in the campaign to save APV recalled Joan Dinkler, an important APV ally and founder of the Houston Housing Concern (HHC). Dinkler and HHC recruited over 100 churches to sign on to a resolution to save APV. Johnson recruited Peter J. Riga, a lawyer and a former Catholic priest to write an editorial. On August 7, 1987 The Houston Post published Riga’s editorial, titled “Allen Parkway Village: Whose Fault?” and subtitled “Officials at all levels seem determined to disperse needy residents.” Riga described two factors that were working overwhelmingly against the residents. He wrote that elected officials were cooperating with developers’ interests and that there were few resources allocated to renovate APV. Further, Riga contended that the renovation funds had been cut off long ago in an effort to push out residents and that the housing authority had been working with other city officials to disperse the poor. Finally, Riga noted that there were about 20,000 families on the waiting list for public housing in Houston and highlighted the moral injustice of developers pushing public housing tenants off the land. The letter worked. Twelve days after Riga’s editorial, The Houston Post published an editorial by Leland titled “Housing for Poor Has a Long Way to Go” and subtitled “Allen Parkway Village reflects administration’s failure to develop policy. He pointed to a 71-percent decline in the federal budget for low-income housing since 1981 and wrote that it was inappropriate to demolish APV when there were thousands on the waiting list for public housing. Leland mentioned Lenwood Johnson’s name twice. Suddenly, Leland was in the APV tenants’ corner. Johnson pushed him to introduce legislation to benefit APV residents. Rep. Gonzalez wrote an amendment that Leland introduced. Leland and U.S. Rep. Martin Frost of Dallas got the amendment added on to an appropriations act in 1987. Frost had similar public housing concerns in his district. After some legislative triumphs and setbacks, including Leland’s untimely death in a plane crash in Ethiopia in 1988, APV residents in 1996 finally signed an agreement, with then-HUD Secretary Henry Cisneros that provided $36 million from HUD’s Office of Distressed and Troubled Housing Recovery for the renovation of APV. The final result was that 300 of the 1,000 units named to the National Register of Historic Places were saved and renovated. Another 200 units were built, for a total of 500 units on the site. One hundred more units were constructed in Freedmen’s Town. While the residents were short 400 units, the larger win was that not one inch of the land was transferred to private developers. Because of the organized effort initiated by Johnson, we saw how the Houston City Council, first voting to demolish APV, later had to backtrack when they saw that the public would not support their actions. The government entities never sought a public consensus or the tenants input before their demolition campaign. Public housing tenants and activists can learn that organizing is the key to getting their voices heard and getting a place at the negotiating table. It shouldn’t sound like, nor should we allow it to be a cliché when we read about residents taking on City Hall and winning. As for Lenwood Johnson, he’s still involved in organizing and inspiring younger people to be involved in social justice struggles. Organize! 2009-06-03T19:00:01+00:00 http://www.shelterforce.org/article/organizing_lessons_from_allen_parkway_village/organizing_lessons_from_allen_parkway_village/#When:19:00:01Z http://feedproxy.google.com/~r/Shelterforce/~3/hofAHga92Ag/ http://www.shelterforce.org/article/can_the_silk_city_forge_its_next_industrial_revolution/can_the_silk_city_forge_its_next_industrial_revolution/#When:19:00:01Z It’s early February and by far the coldest day in an already frigid winter in the Northeast, never mind a wind chill that only the bravest Midwesterner could tolerate. But something about the bright sun and the falling mercury allows for the 77-foot Great Falls, a powerful and elegant geological oasis in these urban environs of New Jersey’s Passaic County, just 12 miles west of New York City, to appear particularly powerful: one of the few things moving with ease amid the Arctic blast. The falls flow aggressively into the Passaic River at the foot of the New Jersey Highlands, offering a glimpse of the industrial powerhouse that was once Paterson, now one of the country’s most economically distressed cities. Nicknamed “the Silk City” because of the thriving 20th century silk industry here, Paterson was eyed by Alexander Hamilton, the first U.S. Treasury Secretary, as the spark that would ignite a new form of industrial productivity, thus adding wealth, independence, and economic security to a fledgling democratic nation. The New Jersey Community Development Corporation (NJCDC) a Paterson-based CDC located in a rehabbed factory on the former Rogers Locomotive campus—an area that came close to being bulldozed in the 1970s for an early vision of nearby Route 19—is looking to build upon Hamilton’s vision, and recently helped to complete a successful campaign to save the Great Falls. On March 30, President Obama signed the Omnibus Public Land Management Act that protects more than 1,000 miles of scenic rivers and streams from commercial development and creates new conservation areas and national parks. The Paterson Great Falls National Historical Park is now established. While known fairly well (though not nearly well enough) in state, the Great Falls are relatively unknown out of state, despite the role they played in the nation’s industrial birth. According to the Paterson Friends of the Great Falls, the 118-acre industrial historic site is home to the largest and best example of early manufacturing mills in the United States, replete with 18th, 19th, and 20th-century waterpower remnants, including a three-tiered water raceway system that was designed by Pierre Charles L’Enfant, the architect and civil engineer better known for overseeing the planning and development of Washington, DC. The second largest waterfall by volume east of the Mississippi, Great Falls stands at the center of this site, described as America’s first systematic attempt to develop extensive waterpower for manufacturing purposes. Of course, manufacturing in Paterson has since left, and while there are still some prominent local businesses, Paterson, the county seat of Passaic, with its 150,000 population, could be described as an urban bedroom community, a Rust Belt city in the heart of New Jersey, and the depressed economy only makes things more challenging. Unlike other cities, Paterson does not have any universities or prominent medical facilities, and while there are some long-standing business community partners, they are not large-scale employers. As such, making the jump into the next economy is a difficult one. Economic Development 2009-06-03T19:00:01+00:00 http://www.shelterforce.org/article/can_the_silk_city_forge_its_next_industrial_revolution/can_the_silk_city_forge_its_next_industrial_revolution/#When:19:00:01Z http://feedproxy.google.com/~r/Shelterforce/~3/rGhSzoei2cI/ http://www.shelterforce.org/article/the_continued_importance_of_fair_lending_in_the_age_of_obama/the_continued_importance_of_fair_lending_in_the_age_of_obama/#When:19:00:01Z For some people who have seen minorities rise steadily to the ranks of the nation’s middle class and have witnessed an increase in diversity in what were once exclusively white residential neighborhoods, concerns about housing discrimination and segregation now seem like yesterday’s news. But for many Americans, housing and lending discrimination, and a lack of access to neighborhoods of their choice still make for harsh realities. Census data reveal that segregation has, in fact, declined in the United States on some measures, and while much of the recorded decline in segregation is due to a decrease in the proportion of exclusively white neighborhoods, the share of predominantly black neighborhoods has remained virtually unchanged since 1980. Where segregation has declined, generally speaking, it has been in relatively small Sun Belt communities with small black populations. In older Northeastern and Midwestern industrial communities, traditionally high levels of segregation persist. The National Fair Housing Alliance estimates that four million fair housing violations occur each year. But still for some Americans, the election of Barack Obama represents a final and definitive end to discrimination in our society, allowing for some to deem unnecessary continued fair housing enforcement. Moreover, we keep hearing that old resilient myth that the current home foreclosure crisis is the result of extending homeownership and home mortgage credit to historically underserved groups—minority families. According to this argument, a broad range of policies aimed at expanding homeownership opportunities and fair lending contributed to the present crisis. In reality, these policies, which include the Community Reinvestment Act (CRA), the affordable housing goals of the government sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac, and the expansion of homeownership in minority communities, are not responsible for the foreclosure crisis. There are several places where we can look to find the real culprits in the current economic crisis. They include the decades of housing and lending discrimination that led to the exponential growth in abusive subprime loans; the lack of adequate regulations in the mortgage lending sector; the deregulation in the financial sector including the mortgage lending sector; the failure to enforce existing consumer protection laws; the 2000 law that ensured that credit default swaps would remain unregulated; the 2004 SEC decision to allow the largest brokerage firms to borrow more than 30 times their capital; the unchecked close relations between rating agencies and companies packaging mortgages and selling securities; and the failure of the SEC to oversee the brokerage firms as they got further invested into subprime debt. These are the culprits of the economic crisis. There is enough evidence that the current crisis is the result of misbehavior by brokers, lenders, servicers, and the mortgage-backed securities industry that even former Federal Reserve Chairman Alan Greenspan said in a 2007 Newsweek interview that the “big demand” for subprime mortgages “was not so much on the part of the borrowers as it was on the part of the suppliers who were giving loans which really most people couldn’t afford.” Handsome profits were made at each level of the supply chain, not least of all by investors on Wall Street, who became the prime drivers for expanding high-cost unconventional home mortgage loans. And despite the evidence and arguments refuting the notion that expanding homeownership in minority communities caused the foreclosure crisis, the myth continues, and might influence the actual behavior of lenders and policy makers. The reason for its persistence is that it lies near the germ of truth, even though the myth is false. The germ of truth about the housing crisis is that abusive lending targeted at minority communities was the precursor of this crisis. And it is the lax regulatory environment surrounding such lending that allowed ever more abusive practices to be developed and expanded. Policies 2009-06-03T19:00:01+00:00 http://www.shelterforce.org/article/the_continued_importance_of_fair_lending_in_the_age_of_obama/the_continued_importance_of_fair_lending_in_the_age_of_obama/#When:19:00:01Z