Technology in the Service of Social Change

Santa Cruz   I drove over the mountain, as they say in this area, and ended up on the top of a hill with a dramatic view of the valley and water, while visiting the stunning campus of the University of California at Santa Cruz. I was there to talk to students who are part of the Everett Program there, where ACORN is new partner, along with other nonprofits. My other motivation was an effort to get a better grip on what the program was all about, as a rookie to the enterprise.

I had gained some sense of the operation over the last year through a series of Skype calls and emails. We are fortunate to have three of the Everett Program students working with our organizers in Bengaluru, India this summer to help create a CiviCRM database for ACORN’s 35,000 member hawkers union there, so this also offered the opportunity to meet the interns face-to-face and shape the effectiveness of their upcoming two months in India with us.

The background I learned from the director, Chris Benner, and veteran staffer and organizer, Katie Roper, indicated that it had been a program for several decades at UC Santa Cruz, but has recently been expanding. Every fall, they begin with about 100 students and by the end of the spring quarter they have about 30 ready to embed in various projects. Historically a lot of the efforts have been California-based, so ACORN is a beneficiary of their growth and expanding vision. Being on the ground I was able to do an early pitch for a team in 2018 to work out of New Orleans to support the tech needs of our organizing both domestically and internationally, which was a nice piece of lagniappe.

Most interestingly was the opportunity to talk to the students for a minute and more importantly to hear their questions and get a feeling for what they were thinking. Spoiler alert: they have a foreboding sense of the world and how it views change and organizers who are part of that process.

Over the years I’ve talked to a lot of classes and groups of young people, but now in the Age of Trump and hyper-polarization,  I was still surprised when the first question asked me whether or not I had ever been threatened in the work and how frequently organizers were assaulted. Later in the session, another young woman asked a question that went to the heart of whether or not a young person in their early 20’s could even play a role in the work and whether or not it was worth the risk to jump into the struggle. At one level, this is encouraging. Young people are taking the temperature of the times, and learning that it’s not pretty out there with love, flowers, and constant applause. If these kinds of questions are any true sampling, they are less naive, and therefore will be better prepared, if they take the leap into the work, to weather the constant storms and flying brickbats. On the other level, it is worrisome whether in these beautiful, redwood towers, people might feel intimidated and fearful of taking the plunge to work in the hardscrabble countrysides and mean streets of the city.

We need an active army of organizers and people ready to work in the allied trades, and that was my message: there’s a role for all of you, but everyone has to put their shoulder to the wheel and help to win the fight in this struggle. I hope they heard me. We need their help.

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Assembling the Facts on the Ground about Land Contracts in Detroit

Oakland   The back of the envelope figures from three days on the doors, based on reports logged into the database by our teams in Detroit, indicate that of more than 125 doors hit, half of the properties are abandoned. That’s not good for neighborhoods, the City of Detroit, or the future prospects of building viable communities there. We increasingly began to question how good this level of abandonment of land contract and rent-to-own properties is even for the companies that specialize in this seamy side of the housing market in urban areas.

As a business model that fits snugly in the category of what a reporter for the New York Times termed the dominant modern “flagrant exploitation economy,” the companies operating within this most predatory segment of the housing and rental market face challenges. By process of elimination of usual factors, an economist speculating on principal cause of the 2008 real estate collapse is now arguing that there was an irrational psychology that almost spread virally that vast sums were to be had by “flipping” real estate, which like the tulip craze in Holland and so many other bubbles of the previous centuries, led to the unsustainable inflation of prices until the crash. Detroit Property Exchange is still pushing that myth in lower income communities with its signs that urge potential customers to call 888-FLIP to connect with the company.

Certainly the lease and contract documents starting from “as is” and including the company’s rights to evict the “buyer” immediately for even a single missed payment at any point in the term of the agreement, lead one to believe that these companies are making their money by flipping the contracts from one “sucker” to another, as an on-line Detroit magazine called the Bridge, writing about our campaign described the buyers. We are not convinced that theory translates into facts on the ground from our doorknocking. Additionally, Professor Josh Akers shared with us an overview of research he and a colleague are soon publishing on land contracts in Detroit over the 10-year period from 2005 to 2015. The largest dozen contract sellers were involved in almost 7500 acquisitions, which was less than 10% of the over 80,000 properties in Detroit that had been acquired through tax auctions or REO’s from various governmental foreclosures. In that period contract sellers had gone through eviction procedures for about 1 out of every 3 properties, but evictions with specific properties acquired by all buyers involved eviction procedures at the ratio of 1 out of every 4 properties, which is not a world of difference. Over a 10-year period that doesn’t translate into a constant churn, likely because there is tepid demands that these practices have inevitably created in these neighborhoods.

Because there is not a robust market for these properties from stories the Home Savers Campaign is hearing on the doors, it seems that tenants wanting or willing to stay in these properties are able to negotiate a fair amount of forbearance even when missing payments because the sellers realize there isn’t a line waiting to open the door behind them. It also explains stories we have heard from several buyers where they are able to negotiate shorter terms when they are willing to take over the properties.

One reason may be the fact that many of these companies are not forwarding payments made by the buyers to resolve tax payments nor are they disclosing past liens on the properties. Lawsuits like those filed against Harbour Properties and Vision Property Management in Cincinnati to collect back taxes, fines, and penalties for their properties in that jurisdiction reveal a business model of nonpayment that seems to typify this part of the industry. That’s a ticking time bomb for the tenant-buyer for sure, especially given the rigid collection and delinquency procedures of Wayne County, and we have heard cases falling into this bad basket every day in Detroit, but it also seems to be leading to shorter term contracts and more negotiating opportunities if the campaign could engage the parties successfully.

We’re finding the handles, but we are not convinced yet that people want to grab them, given that many still see themselves as renters, rather than potential owners. That’s the puzzle we still need to find, even as we are understanding more and more about the market and these companies exploiting it.

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The Confounding Contradictions of Detroit’s Land Contract Houses

Detroit   It was a rough day on the doors in Detroit. One team recorded 14 abandoned houses out of the 17 on the walk list. Remember that these were all homes according to all available records that are owned by one of the big three land contract companies operating in the city: Harbour Portfolio, Vision Property Management, and Detroit Property Exchange, the only local outfit. Another team had eight on its list, and we had six on ours. The math is unsettling and profound, meaning that more than half of the houses these companies owned were abandoned and therefore open wounds bleeding on their blocks, neighborhoods, and community.

There were three dumpsters in the driveways of the abandoned houses our team visited and a trailer at another with a couple of bags of trash on it, but no signs of workers or work being done at these locations. At one location that we marked as “not home,” because the neighbor across the street told us that there were people going in and out of there and work being done, who knows what the story might have been, but the impression from the other locations on our list, left me wondering if these were dumpster “decorations,” rather than construction sites. We were roughly, and it was often rough, in central Detroit, if there’s such a thing, while one team was on the East Side and another was on the West Side. They reported no dumpsters and signs of construction on the abandoned houses on their lists. Don’t get me wrong, the land contract houses were absolutely not the only abandoned houses, and we saw abandoned houses on our route that were not not on our list but had signs offering them for sale, if one could call it that, or auction, with come-on’s hawking $400 a month down payments and lures advertising opportunities to flip the homes or rent-to-own more cheaply that buying. Once we were back at the offices of the historic and giant Ford Motor based UAW Local 600, which had opened their doors to the Home Savers Campaign for this project, we discovered, to no one’s surprise at this point, that both of the names on the signs we saw were simply other eye-candy LLC’s that were part of Detroit Property Exchange.

rent-to-own signs from Detroit Property Exchange subsidiary

Visiting with people, the contradictions are confounding. Our first visit was a woman with had just completed a contract with DPX as locals call Detroit Property Exchange, though her house had been listed under their French Sirois subsidiary. She had been in the home for 12 years and dutifully paying off a mortgage, until two years ago. She was informed then that DPX had bought her home by purchasing a $6000 tax lien. She had being paying everything in the usual bundle to her mortgage servicer, who had gone bankrupt and not paid her taxes, so Wayne County had put her in play without any notice. DPX gave her a contract to buy back the house for $20,000 while paying $750 per month as part of a lease to live there. She was happy because she had managed to pay them off in 18-months, partially by taking advantage of two “matching” opportunities, one at income tax refund time, where they had matched her $2500, and another a month or so later when they matched her $1000. She was proud of herself for getting them off her back and saving her house, but the math still adds up to street-side robbery. She had paid DPX $16,500 on the contract plus another $13,500 in rent, or whatever you might want to call it, so they had $30,000 from her in a year-and-a-half by stealing her house from the taxman when her mortgage servicer went belly up. The day before another team had stumbled onto a similar case, so this woman’s story is, tragically, too common.

Vision Property Management lockbox on abandoned hous

All of these contracts are predatory, though and people were being ripped off right and left, but one home we visited we talked to the brother on the porch, who was apologetic that he had not gotten his act together to buy a house, while both of his sisters had just done so, though we knew this sister was on a rent-to-own contract with Vision Property Management and suspected that was the case with the other as well. Earlier in the morning, I had briefly addressed more than 50 people in the regular meeting of the Detroit Action Commonwealth at the Capuchin Soup Kitchen. People there knew about land contracts, and they knew ACORN, so I was in good company. After a brief explanation of what the Home Savers Campaign was there were questions flying from the crowd. One caught me up short and has left me thinking more and more about these contradictions. A young man said he was on SSI payments of $750 per month. His question: how could he get one of these rent-to-own houses?

Detroit Action Commonwealth Meeting

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“Option to Buy,” another Twist on Predatory Purchase Schemes

Detroit   Preparing for the Home Savers Campaign teams to hit the doors in Detroit and visit with victims of the various installment land purchase and rent-to-buy schemes in the city, a crew of us sat down for a preliminary briefing with Joe McGuire, a staff attorney with Michigan Legal Services who has tussled with a number of these companies while representing their low-income clients. Joe was a fount of information and couldn’t have been more helpful, but much of what he told us was depressing in the extreme.

Perhaps what demonstrates this bleak credit desert for lower income and working families in the Motor City most vividly are the terms of one lease he shared with us promulgated by a company called Bean. It’s hard to make a rent-to-own agreement look good, but the Bean agreement was a “residential lease and option agreement,” which, when read closely, was really only a one-year option to buy the property with absolutely no guarantee that the agreement would be extended past the one year allowing the “lessor” to finally purchase the home, even if they had met all conditions of the agreement perfectly, unless of course they magically came up with the full purchase price within 30 days of the end of the lease. The mishmash of legalese really was simply a one-year ripoff and an option-to-steal by the lessor from the lessee. The terms started with a $4000 down payment for the “privilege” of purchasing the house for $30,000. An additional “option consideration of $130 per month” would be paid toward the “down payment/purchase” of the property as well as $645 per month throughout the one-year term which was the lease on this “as is” house. Any repairs, “major and minor” would be paid for by the “optionee,” and if any are paid by the “optioner,” they are added onto the purchase price. McGuire was as stunned by the agreement as all of us were.

Much of what he told us was equally bleak. The city requires an effective warrant of habitability before people move in, and all rental units, including those on rent-to-own contracts are required to be registered, but it became clear there was little to nonexistent enforcement. Even so, McGuire felt the protections for rent-to-own were better than those for land contracts, because they were even better shielded by state law with little thought that the legislature would improve them. In a sobering catch-22, McGuire actually made the case as we were leaving that he worried that tightening down on rent-to-own abuses might lead to more land contracts, which given their legal protections would be even worse for the victims. Forfeiture to the city and the Detroit land bank seemed equally fraught and neighborhood crippling.

The conversation was not without some rays of hope. Work by some of the anti-eviction groups was encouraging. Data being prepared in cooperation with local universities and professors might offer some opportunities. Focus on concentrated neighborhoods where this kind of activity might be curtailed, McGuire felt could show results.

The odds were long, but we were welcomed into the fight. Any push back would be a positive. Any effort to force more accountability by victims would be helpful. Detroit might be ground zero for this campaign, but there were mountains to climb with uncertain footholds on every route.

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ACORN a Major Force in Voter Registration for Tenants in United Kingdom

New Orleans   Your mind just did a double take, right? ACORN and voter registration in the same sentence, that’s so 2008, right? Well, yes and no, but screw your head on tighter and focus, focus, focus, because now we’re talking about ACORN as a force for voter registration, and the setting is the United Kingdom. What’s up?

The snap election called by British Prime Minister Theresa May is coming soon, and voter registration has become more difficult in the UK. Until recently the head of a family with one swoop could register everyone in the household, now everyone must individually register. Other new rules that fit in with the global voter suppression efforts of conservatives impact potential young voters because universities, for example, are barred from registering students, largely to keep them from creating a voting block in the towns where they are located.

The other huge group that is being disenfranchised now in the UK is tenants, and ACORN’s base in England and Scotland is significantly composed of tenants, given the housing affordability and access crisis which has swept the UK. The Guardian quoting an ACORN report, noted that “ 93% of property owners are registered to vote but only 63% of renters.” Others say the number may be as low as 59%.

In a more recent article in The Guardian, the case was even clearer that ACORN is working to register and bring attention to millions of tenants being disenfranchised. The Guardian reported:

Campaigners have also warned that another high-risk group is the more than 3 million private renters in England. Generation Rent and ACORN, both pressure groups for renters’ rights, estimate that about 1.8m private renters have moved home since the 2016 referendum and must therefore register again.

Private renters are typically on tenancy agreements of no longer than 12 months and are six times more likely to move in a given year than homeowners, the groups said. A further 1.6 million private renters are estimated not to have been registered in the first place.

ACORN’s national organiser, Stuart Melvin, said renters’ rights were dependent on registering to vote. “Renters need a government that will reform the housing market to protect them from unfair evictions and rising rents, and we won’t get one unless we vote for it,” he said.

Before renters can do that, they need to make sure they’re registered, and when you are on the register it is too easy to fall off it when you move.”

Buzzfeed was even more specific on the importance of ACORN’s efforts noting that “research from Renters Vote, a campaign from renters rights groups ACORN and Generation Rent… say 1.8 million renters who are eligible to vote moved home since the EU referendum in June 2016 and will need to reregister in their new address, while a further 1.6 million renters were unregistered to start with…Renters move home six times more often than homeowners on average, due to the widespread use of 12-month assured short-hold tenancy agreements, meaning they have to register each time they move.”

This is a major issue given the upcoming election, and the clock is ticking. Despite the efforts of ACORN and our partners, a huge number of tenants will be left voiceless in this election, as ACORN’s national organizer, Stuart Melvin noted. There isn’t much doubt that that was the point of these voter suppression efforts.

One bright light for the future was included in the recommendations by a Guardian columnist of what needed to be done to fight this problem in the future, which we totally embrace:

6. Unionise

Official recognition for tenant unions, such as Acorn, Living Rent [ACORN’s affiliate] in Scotland, Tenant Voice and Generation Rent. Include them in discussions, invite them to select committees, listen to what they say.

Amen to that!

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Citizen Wealth in Home Ownership is Becoming Citizen Inequity

New Orleans   A couple of years ago I wrote a book called, Citizen Wealth: Winning the Campaign to Save Working Families. It was commonly known that for low-and-moderate income families the largest index of any wealth they possessed was based on whether or not they had managed somehow to become a homeowner. At ACORN we had fought that battle for years in order to get banks to fairly offer mortgages to lower income families so that they could acquire single-family homes or coops, and in those fights had won billions allowing millions to own their own homes. It was certainly not enough to achieve any semblance of equity, but it was a good step forward, particularly increasing the home ownership percentages of African-American and Latino families to record levels, although almost all of those gains were wiped out by the 2008 Great Recession.

In doing the research for the book, I was shocked that the largest so-called social program in the nation’s budget, dwarfing direct welfare, food stamps, and all other housing benefits, both singly and collectively, was the mortgage interest deduction, which now totals more than $70 billion annually. As disturbing was the degree to which the mortgage interest deduction was largely not a social program which benefited the citizen wealth of lower income families but was disproportionately benefiting middle class and wealthy families. After all, at the threshold where such an income tax deduction had real financial weight and meaning, a family had to be in an income bracket high enough to justify itemizing their deductions.

As the Home Savers Campaign this year has visited with families in a number of cities in the Midwest and South, it has also struck all of us that as blatantly predatory as many of these contract for deed and rent-to-own scams have been to the families victimized by them, many of these families have accepted the risks even accepting the dangers and the deceit, simply because they were desperate for housing they could afford, no matter its condition. For the same reason, the reaction of many victims when they realize they have been swindled has often been as much anger as it has been resignation, and a feeling they should walk away, rather than fighting for justice for their investment, all of which speaks to the crisis in affordability.

Reading “House Rules” by Matthew Desmond in the New York Times there were more facts and figures that underlined the affordable housing crisis which is driving income and racial inequality throughout the country. Some facts:

  • The average homeowner boasts a net worth ($195,400) that is 36 times that of the average renter at $5400.
  • With rising housing costs the housing standard where 30% or less of a family’s income equals affordability, half of all poor renting families spend more than 50% of their income on housing costs and 25% spent more than 70%.
  • In 2011, the median white household had a net worth of $111,146, compared with $7113 for the median black household and $8348 for the media Hispanic household. If black and Hispanic families owned homes at the same rate as whites, the racial wealth gap would be reduced by almost a third.

There was much more, but you get the point. Worse, the consensus is that there is no political constituency for reform of the mortgage interest deduction, nor in the absence of reform an equivalent program or benefit that would help renters or bring balance to this wealth and racial inequality.

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