It Helps the Rich and Powerful that People Are Mystified By Enormous Inequality

New Orleans   Some professors are reporting that they are changing their minds about the importance of equality to people. They argue that it’s more about access to opportunity than it is about distribution. Six of one, a half-dozen of the other.

Key to their change of mind, reported in the Wall Street Journal, was a survey of 5000 Americans in 2011. The upshot was that those people surveyed thought that in a perfect society, individuals in the top 20% should have more than three times as much money as individuals in the bottom 20%. They also were unaware how unequal society is today, thinking that the bottom 40% had 9% of wealth and the top 20% had 59%, while actual proportions were 0.3% at the bottom and 84% at the top.

Frankly, it was hard for me to follow the argument being made by the profs, at least from the weight being attributed to the survey. To say that people are OK with there being a $3 to $1 difference between the top and the bottom when they believed that there was more than a $6 to $1 divide now, would seem to make the case that in fact people want major advance in equality. Furthermore, when you compare the reality that there the top 20% have 280 times more wealth than the bottom, then narrowing the gap to the richest segment only having three time the wealth of the bottom 20% is almost revolutionary!

It seems to me that from those numbers the desire for more equality is deep and profound. This is the United States, and Americans are not suddenly going to say they believe that everyone should get an absolutely equal piece of the pie with a dollar for me for every dollar for you. This is country proclaiming itself the “land of opportunity.” People want more equality, but they only know how to get there by winning more equality of opportunity, hoping against the evidence and their own life experience that the gap narrows with better breaks and a fairer deal.

In this age of gross inequity and almost total residential segregation of huge wealth from most lower income people, and vice-versa, there is no way people can get their minds wrapped around the fact that people holding onto more than 280 times their wealth are living in the same world or what their world might be like. It makes your head hurt. It strains the brain.

Meanwhile those doing the bidding fluff up the opportunity issue to change the conversation from gross greed at the top to false claims of slovenliness at the bottom. And, they get away with it more often than not, until it comes to taking something away from the bottom, like their healthcare, and then it’s harder to pull off the crime in broad daylight, since it normally happens daily in the high towers and behind the gated walls.

No one should make the mistake that inequality is not a huge issue and a bomb rolling around the street waiting to be exploded.

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Heartbreaking Stories of Housing Ripoffs

New Orleans   Meeting with friends and lawyers in Austin, Texas, including my longtime, go-to-counselor for organizational and personal matters, we had stopped briefly on the way to their celebrated annual spring crayfish boil for a cup of coffee and to watch marchers with homemade signs hearing towards the Texas capitol in the name of science. Later in the back patio of the law firm’s offices in a downtown house, while we watched young people take their turns at stirring the four boiling pots filled with crayfish, potatoes, corn, mushrooms, and even sausage, we found ourselves talking about how in the world it could be legal for the contract for deed and rent to own real estate predators to be able to stay in business given their total lack of compliance with local laws or contractual ethics of any kind whatsoever.

We discussed the lawsuit filed in Cincinnati, Ohio by that city to try and collect $335,000 in fines and penalties from Harbour Portfolio, the Dallas-based private equity vulture financier of contract-for-deed sales, and whether or not the company would run from the business. We made plans to challenge any application that the principals might make to acquire banking assets in Arkansas with our organizational allies there.

Where there was no question was that these companies had to be stopped. On the way to the airport, I read a report from Craig Robbins of Action United in Philadelphia who had been part of our recent doorknocking teams in Pittsburgh, Akron, and Youngstown. On a recent call, we had asked him to jot down any stories that we could put on the Home Savers Campaign website from the visits he was making with Vision Property Management, the South Carolina based rent-to-own predator. I opened the email and here is what I read:

Maria Rodriguez and her husband “purchased” the house at 917 Sanger St., in the Frankfort section of Philadelphia for $65,500, almost 4 years ago. Their credit was not that good, so Vision seemed like a good way to pursue their dream of home ownership. They both worked: he as a landscaper and she worked at a hotel doing housekeeping. Contract was signed on 9/1/13 w/BAT Holdings 8, LLC. They put down $2000, plus $465 as the monthly lease payment, $105 for real estate taxes, $30 for general liability insurance, or $2600 as an initial payment and $600 a month. Contract runs until August 2020. $57.06, +2000 initial option, of the monthly payment is credited toward the purchase price. Maria and her husband have put about $25,000 in the property-huge issues when moving in like unpaid water bills, no heating or electrical system. They believed that at the end of the contract, in 2020, they would own the property and get the deed. Instead, they will have paid $6,793 toward the $65000 house price. On Aug 30, 2020 they have 3 options: give Vision a check for $58,206; walk away, or they can convert to seller financing with a new contract for the remaining $58K. Like all the Vision properties people we’ve talked to, this was a total surprise.

Change the names and the listing price and this is the story of Vision – and many companies like it – all over the country. They have to be stopped.

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Charters Don’t Change School Segregation

New Orleans   In the wake of Hurricane Katrina in 2005, New Orleans public schools were hijacked through a state takeover that made the city the largest charter school experiment in the country. A special grant from President George W. Bush became an offer too good for the state to turn down as it muscled aside the publicly elected school board and set about redesigning the school system. Where the charter movement had been stopped in the past by requirements for concurring votes by the system, the parents, and the teachers, the union was broken and the takeover was complete.

There were a number of claims for what this takeover might mean. Most of them have not been met, including improvements in test scores and student performance. A proposal to turn over the last five non-charter schools to a newly minted charter operator was suddenly withdrawn, preventing the system from now being 100% charterized. The school board is gradually replacing the state recovery district, so there is hope for local control once again.

One claim though that the charter-boosters had maintained as a premise for their bold experiment is that the school system under their control would be more equally integrated by race and income. Making the whole city open-admissions was supposed to be a workaround for residential segregation in this majority African-American city. On that score the experiment has earned an F minus.

This must have been a bitter pill for the Tulane Education Research Alliance for New Orleans to report since Tulane and its then president had been huge backers of the charter movement including funding one school, essentially for their own staff and professors. The report indicated the following:

  • High school segregation increased for students who were African-American, Latino, low-income or learning English.
  • White students were just as likely to be concentrated in particular schools as they were pre-Katrina.
  • The typical low-income student is in a school that is 78% low-income, which is 6% worse than before the storm.
  • Before, Katrina, only one high school was less than 80% black out of 125 campuses, now with far fewer schools, six are less than 80%.

Most devastatingly, the district was 92% African-American before Katrina and is now 85% African-American, in spite of some significant demographic changes in the city. Tellingly, private and parochial schools enroll a majority of the city’s white students. Parents simply did not buy the charter’s claim and elect more diverse schools. They continued to self-segregate. This is not a surprising pattern, but more the norm. The Civil Rights Project at UCLA, according to the Times-Picayune, has repeatedly found that charter schools are “generally more segregated than public schools.” Penn State researchers have found that black and Latino students “tended to move into charter schools that were more racially isolated than the public schools they left.”

Charters still seem mainly about privatization and imposed ideology. The notion that they increase diversity based on income and race seems to just be a cover story, and is certainly not proven out in New Orleans or other cities to date.

***

Please enjoy Shelly Fairchild’s Mississippi Turnpike. Thanks to KABF.

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Trump’s Taxes Trip Up His Tax Reform

New Orleans    A reported number of 100,000 hit the streets in various cities, not to celebrate Easter, but to continue to demand on the eve of the US tax deadline that President Trump release his tax returns. The President was golfing and preparing for the annual Easter Egg Hunt on the White House lawn, so was nonplused about these latest rallies.

On the other hand, in a rich irony, a steady stream of Republican Congressional representatives are now joining the Democrats in calling for Trump to release his returns as well. Many in Congress are unprepared now to move forward on Trump’s much vaunted campaign promise to achieve significant tax reform until they see Trump’s own returns to make sure that the President and his family are not going to personally benefit from any tax reform proposals. Talk about being hoisted by your own petard!

These are not trivial matters obviously. There is always the risk of a massive giveaway to the rich, because that has been pretty much standard procedure for many tax issues in recent years, and of course whether Trump is just a millionaire or a billionaire, if there’s a giveaway, he would certainly be in line. More tellingly, a number of the proposals being floated out there, including one that would collect an extra billion dollars in revenue would mean eliminating one of the real estate developers favorites which allows them to deduct the price of interest on debt from their taxes, and god knows, Trump the developer loved debt and that deduction. Some of the sticklers in Congress are saying they have to see Trump’s taxes to make sure they are not lining his pockets, which would be hard to explain to voters around the country.

The additional irony in the land of dysfunction that has typified the first 100 days of Trump time is that there still is no tax reform proposal for all the talk and promises. The Ryan plan which would have larded on an export tax at the border, also helping pay for the wall, has come under fire from a host of businesses and the deep-pocketed Koch brothers who have mobilized their troops against any such notion. Trump has also flip flopped back and forth in fits and starts about trying to resuscitate his healthcare mess because of some tax implications they would have achieved by taking away peoples’ insurance.

The bottom line seems to be that there is no tax reform proposal that has jelled sufficiently on the right or left, leaving him once again without a winning coalition or a coalition at all that could win passage. Trump is stuck. Polls are clear that the American people want to see his returns, but it’s not a life or death issue for them. He wants to keep his business on the down low but can’t move without a plan and a dose of transparency. This guy can’t seem to win for losing and tripping over his own tie.

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Cities Trying to Fight Back Against Home Exploitation Scams

housing inspector in Toledo

New Orleans     Perhaps against their will, some Ohio communities have become ground zero in trying to throw roadblocks in the path of companies exploiting the desperate need of lower income and working families for affordable housing and, just maybe, the hopes of traversing the credit desert to home ownership.

The best local ordinance that seems to have emerged in this effort is in Toledo. Chapter 1765, entitled Conditions for Conveyance of Property by Land Installment Contract, passed in 2015, tries its best to grab this bull by the horns. Toledo does so by first making the issue of responsibility very, very clear. It’s not just the seller or owner of the property that has to follow the ordinance but “any agent” of the owner and any entity defined as the owner.

The critical issue that ACORN’s teams confronted repeatedly in recent visits to Pittsburgh, Youngstown, and Akron was the fact that families were finding themselves in land contracts which met no conceivable standards of habitability. Toledo’s ordinance goes out of its way to do two things that are essential in protecting families from abuse in these contracts. On one hand the city insists that all contracts have to be recorded with the city. Most of these companies are playing whack-a-mole in this regard. Vision Property Management for example listed only five properties in Pittsburgh, though we found more than twenty on a quick search of property ownership records, and suspect that the real number is many times more. Secondly, and even more importantly, Toledo requires a certificate of occupancy before a family can reside in a house under a land installment contract and only after the city has inspected the property and its major systems and found that they are satisfactory.

The language in the ordinance is mandatory and unambiguous:

(a) No vendor shall convey any interest in a residential property through land installment contract unless a Certificate of Property
Code Compliance or Temporary Certificate of Property Code Compliance has been issued, pursuant to this section.
(b) No vendor shall fail to deliver to the vendee a copy of the current Certificate of Property Code Compliance or Temporary
Certificate of Property Code Compliance prior to the execution of the land installment contract.
(c) No vendor shall fail to record, as provided in R.C. 5301.25, the land installment with the county recorder and deliver a copy to
the county auditor within twenty days of the execution of a land installment contract.
(d) In a conveyance of any interest of a residential property through land installment contract sale, no vendor shall knowingly
require a vendee, as a condition of the sale, to sign a “quit claim” deed, deeding the property in question to the vendor in the event of a
default by the vendee.

The penalties are perhaps weaker than they should be, beginning at $250 for the first offense and moving to $1000 for the third within a two-year period, and judging the offenses to be a misdemeanor if recurring, which may not be sufficient to intimidate these fly-by-night outfits. Furthermore, the devil is in the details, when it comes to how aggressive Toledo has been in forcing the hand of these predatory operators, which we have yet to determine.

The City of Lorain in Ohio passed an ordinance in 2014 also requiring certificates of inspection and occupancy clearly also trying to get their arms around this crisis in their community, but sadly a close reading of the requirements pulls them up short. Lorain’s measure tries to impose the burden “at the point of sale.” Part of the entire business model of these companies and the core of this predatory scam is keeping the family from ever getting to the point of sale and forcing them to live in often dangerous structures with limited resources holding on to little more than their hope of ownership.

Similarly, Youngstown, Ohio, path breaking ordinance creating a “foreclosure bond,” forces refundable payments after foreclosures, forcing responsible upkeep of the property by corporate and individual owners, and has worked spectacularly in managing the overall condition of communities from what we could see, but doesn’t cover evictions, at least not yet, or specifically rent-to-own or land purchase contracts, and of course is better at locking the barn door after the fact, rather than on the front end like Toledo.

Regardless, Ohio cities confronted with this grassroots crisis are responding, rather than pretending it doesn’t exist or looking the other way like most communities, oblivious to the way that low to moderate income families are being exploited by these schemes and forced to live in abominable conditions.

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Wisconsin Worker Whistleblowers Expose Vision Rent-to-Own Scams

wearegreenbay.com

Pittsburgh   Vision Property Management, headquartered in South Carolina, seemed like a bad penny that kept turning up in every neighborhood we door knocked in Pennsylvania and Ohio. The ACORN teams spent a lot of time before and after these visits trying to understand as clearly as possible the business model for the company. It was hard to ever figure out how they lost money on any of these almost universally rundown and dilapidated properties, but their model wasn’t so much rip-and-run, as it was lie-steal-and-scam.

We were mystified how this predatory outfit could get away with this plain and simple fraud and grand larceny? One of our team found a video from Green Bay, Wisconsin of all places done by Channel 5 television and its reporter, Nate Stewart. The piece had the vibe of an ISIS hostage video with the speakers disguised so that Vision would not recognize them. Perhaps they were concerned that now that they were confessing their shameful acts, that Vision might do the unspeakable to them? Since Vision does virtually all of its dirty work via the internet and telephone with virtually no on-the-ground staff, they were probably right to realize that the company could follow the dots back to them.

We had heard plenty horror stories from victims, and reading the Green Bay report, these were confessions right from the horse’s mouths! Read, listen, and weep:

· “We knew we were putting people into situations that they couldn’t handle.”
· “My big problem with the culture there was that we knowingly manipulated people’s bad situations for our own gain.”

Ok, you may not have been with us on the doors, but if there was any doubt about their corrupt business model, here’s what another Vision worker has to say:

“When the customer ended up signing the contract and there were liens or the pipes were missing, we could say ‘well we had a recorded phone call with you, I instructed you to go find that out.’ But by nature, we weren’t dealing with the most sophisticated real-estate consumer. So I can say ‘go to the clerk of court, go look up public records’ all day long, but if you don’t know how to do that or if you don’t even know what I’m talking about and you just want to get off the phone with me so you can get into this house, just say yeah all day long.”

“If they’re already in a financial situation that puts them in a position to be working with a company like this, they probably can’t afford to throw down several hundred dollars to have an inspector come in and look at all this stuff. Often times when they do, the inspectors are appalled like, ‘no, no don’t buy this!'”

We met a number of people who were on SSI or Veterans payments, where Vision was taking between one-third and one-half of the wannabe buyer’s check for their scheme, and according to their workers in Green Bay, this was no coincidence, but their deliberate strategy. Here’s what one said to Channel 5:

“We sold a considerable amount of houses to people who were making a $721 month social security check – and with $228 monthly payments, they had no business living in the house. They obviously didn’t have the means to repair it themselves or pay somebody to repair it.”

The Vision crowd, according to its employees, were equal opportunity thieves. Their business model was exploiting lower income families desperate for housing, but they didn’t mind stiffing local governments and anyone else they owed a buck. Here’s what one woman told Channel 5:

“I would sometimes record two or three deeds at a time for one actual sale or one actual purchase, and no tax would be paid because Michigan, Pennsylvania and Maryland have higher taxes. They yelled at me and told me they refused to pay that tax and I would need to find a loophole. There were some that were legit, but the majority of them we just didn’t send them in. We were told that ‘we’ll just pay it if we get caught, but if we don’t, we’re not paying the government a dime,’ and so that’s what I did.” She added that many times she was told to get the deeds to the county overnight so Vision could get it processed in the tenants name before they found out – even if the house had many repairs needed or was up for demolition.

These are just stone cold crooks. You’re wondering why the FBI isn’t investigating for wire fraud, well so am I. You’re wondering why the Consumer Financial Protection Bureau isn’t all over these bad boys, well so am I.

In November, Channel 5 touted the fact that Vision’s operation in Green Bay was being investigated by the Attorney General in Wisconsin. Writing this, I found another Channel 5 piece in mid-February but there’s still no sign almost six months later that the AG in Wisconsin has done much to stop Vision. In fact the February piece was mainly about the fact that reporters from the New York Times, the City of Green Bay, and Channel 5 were all being stonewalled by Vision. No mention of any activity by the Wisconsin AG or any progress there.

Stealing from poor and working families isn’t big news, it’s just standard operating procedure for Vision and a pile of other operations. It seems pretty clear that Vision will operate with impunity until we organize enough of the victims to stop them.

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