Rising Rents are Squeezing Low-and-Moderate Income Families

New Orleans   The National Low Income Housing Coalition released its 2017 annual report, “Out of Reach,” looking closely at the impact of rising rent throughout the country and how it is pushing lower income and working families into untenable situations because the gap between rent and wages is widening. Millions of families are joining the great poet Langston Hughes by living his haiku: “I wish the rent were heaven sent.”

The gut punch of the report is plain and simple:

The 2017 national Housing Wage is $21.21 per hour for a two-bedroom rental home, or more than 2.9 times higher than the federal minimum wage of $7.25 per hour. The 2017 Housing Wage for a one-bedroom rental home is $17.14, or 2.4 times higher than the federal minimum wage.

State by the state, county by county, the story of this growing crisis is stark. The gap is the largest in a bunch of overwhelmingly “blue” states, which may be one of the reasons Congressional representatives are not running up the aisles and going from desk to desk with a Paul Revere warning call to “Help, the Landlord is Coming!” Those states with the largest gap between wages and what it cost to rent the average two-bedroom house are led by Hawaii, then Maryland, California, New Jersey, Vermont, Connecticut, Massachusetts, Maine, New Hampshire, and then Washington, D.C. I don’t need to tell you that this is aggregate data because you were already scratching your head when you didn’t hear New York, so yes, thanks to lower average rents upstate that offset the New York City metro area, they didn’t make the ten.

Sure enough when you look at the data even states with relatively lower rent still find that urban metropolitan areas like New Orleans, Houston, Miami, Salt Lake City, Dallas, Seattle, San Antonio, Anchorage, Chicago and elsewhere would require a minimum wage worker to labor 80 hours a week to find a one-bedroom place where they could live. And, yes, the Coalition’s point is not that everyone is working 80 hours to do so, but that if they were able to swing a place that is what it would take. The cold, bitter truth on the ground is that they cannot, which leads to overcrowding, homelessness, and embracing rent-to-own predatory contracts or whatever is available until the eviction notice comes.

Even the states where the average wage required to rent a two-bedroom house is relatively low, it’s still astronomical in terms of a family budget. Want a two-bedroom in Arkansas, then you need to make $13.72 per hour, the lowest wage to rent ratio in the country. Neighboring states are a good comparison with Mississippi at $14.84, Louisiana at $16.16, and Texas at 18.38. The lowest wage required after Arkansas is Kentucky at $13.95. The problem is obvious though. Wages are pretty much stuck at $7.25 in those states and too many of the big whoops in these states are fighting to keep wages that way.

As the report makes clear, it’s not for lack of working or lack of looking. Other “key findings” include:

Six of the seven occupations projected to add the greatest number of jobs by 2024 provide a median wage that is not sufficient to afford a modest one-bedroom rental home.

An extremely low income (ELI) household whose income is less than the poverty level or 30% of their area’s median cannot afford the average cost of a modest one-bedroom rental home in any state.

In no state, metropolitan area, or county can a full-time minimum-wage worker afford a two-bedroom rental home. In only 12 counties can a full-time minimum-wage worker afford a modest one-bedroom rental home.

It’s easy to see where this is going: bad to worse to crisis. I’m seems like we’re already there.

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Government at all Levels Needs to Act on Contract Purchase Predators – Now!

New Orleans   Advocates and lawyers are firing more and more bullets at contract purchase predators and the Home Savers Campaign has raised the ante on its demands to Fannie Mae (FNMA) in yet more signs that the offensive against these real estate robber barons is gaining increased traction.

Another front has opened with the filing of a lawsuit by Fair Housing Center of Central Indiana at the end of May. They went after local operator Empire Holding Company and its subsidiary Rainbow Realty, that has acquired over 1000 dilapidated houses in the Indianapolis area and is marketing them as contract purchase rent-to-own properties. The owner admits that virtually all of them are uninhabitable. The Fair Housing Center argues that they are breaking a pile of laws, but also makes the claim that a huge percentage of these houses are in African-American areas and that the contract sales push is directed at these same populations in a discriminatory manner.

Sarah Mancini and Margot Saunders, both of the National Consumer Law Center, and experts in this area, make a similar case in looking at the metro Atlanta area in an article pointedly entitled, “Land Installment Contracts: The Newest Wave of Predatory Home Lending Threatening Communities of Color,” in a recent issue of Communities & Banking. They call attention to the work of the Atlanta Legal Aid, saying,

Atlanta Legal Aid attorneys conducted a search of property tax records in six metro Atlanta counties and found 94 properties currently held by Harbour Portfolio in the Atlanta area; most of these homes were likely being sold through land installment contracts as that is Harbour’s business model.9 Nearly all those properties (approximately 93 percent) were located in census blocks that are at least 60 percent nonwhite, and a significant majority were in census blocks that are at least 90 percent nonwhite.

It’s hard to avoid underlining the obvious. First, the scale of this activity is huge, when you are talking about a local company in Indianapolis alone handling more than 1000 such houses. In an evil local market, they dominate any other national players. Secondly, these are not equal opportunity predators, but are de facto discriminators.

For these reasons and others, the Home Savers Campaign is also increasing the pressure by sending a letter to the head of Fannie Mae today, asking that the agency investigate and bar not only Vision Property Management, as they did recently, but also Harbour Portfolio. In addition the campaign named a number of companies using the same practices in the Detroit market and demanded that they also be barred, indicating as well they they wanted a meeting with FNMA in order to push for clearer standards to block access to government auctions in the future to any company that plans to sell them “as is” through land installment contracts. Home Savers Campaign also indicated that it intends to make similar demands city to city in other markets for FNMA bans, as they understand the FNMA criteria better.

It’s bad, and it’s on!

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Hammer and Tong Fights Over Rent Control – Look at Santa Rosa and Scotland

New Orleans   With rents soaring and evictions rising in cities all over the US and the world, the real estate interests are finally facing their worst boogeyman: rent control! Rather than responding to the affordable housing crisis worldwide with new and innovative plans to provide additional housing, they are mainly digging in their heels and going deep in their pockets to fight even the most moderate proposals for market regulation or modifications.

Cases in point pop up everywhere. In Scotland, ACORN affiliate Living Rent, took advantage of devolution to win some introductory steps toward controlling spiraling rents, as the number of private tenants soars in a landscape that used to be heavily invested in public housing schemes. As an introductory step, there are now a series of thresholds that trigger the creation of “rent pressure zones,” which could cap rent increases in areas of Edinburgh, Glasgow, and Aberdeen. An extremely modest proposal to mandate inclusionary zoning for new housing developments in the City of New Orleans narrowly avoided overturn with state legislators tried to pull the rug on it.

All of these high pressure affordable housing contests are knife fights, and right now the sharpest blades drawing the most blood are in Santa Rosa, the smallish 175,000 county seat of Sonoma County, legendary mainly for being the heart of California wine country and northern suburbs of San Francisco. There is an election scheduled for June 6th on whether to implement a rent control ordinance approved narrowly on a 4-3 vote by the city council earlier in the year. Real estate interests quickly mobilized petition signatures, many claim under dubious conditions, sufficient to force the issue to the ballot. Veteran political professionals all agree on only one thing – this is the most expensive election of any kind in Santa Rosa, totally almost $1 million on both sides.

On one side the Chicago-based National Board of Realtors recently dropped over $300,000 into the fight as part of the more than $800,000 raised by the ordinance opponents. On the “yes” side one of the key players is the Gamaliel network affiliated community organization, the North Bay Organizing Project, a well-regarded dynamic and effective coalition of 22 faith, labor, and immigrant organizations. I got to know Davin Cardenas, the lead organizer, on the Organizers’ Forum Dialogue in Bolivia, where his work and contribution created a fan club of me and our entire delegation.

The election is too close to call, but the irony again is how moderate the proposal really is, especially in the face of the apocalyptic arguments of the realtors. The city has an estimated 11,076 apartments that would be affected, or about 18 percent of the city’s 67,000 housing units. With an average household size of 2.6 residents, that’s about 26,400 people. The provision excludes single family houses, duplexes, triplexes that are owner occupied, and condominiums. The ordinance only takes rents back to January 1, 2016 which was at the tail end of a 5-year surge that pushed rents up 50% with a vacancy rate of 1% in the city. There are also a number of exceptions that allow rents to be increased, including a virtual communistic guarantee of profits for the landlords. This ordinance is decidedly not the revolution.

Perhaps the real stickler is that the ordinance is not solely about rent regulation, but also establishes in this growing wave of tenant evictions nationally, that separation can only be for “just cause.” And, if established that there was no just cause, there is a real penalty: landlords would have to pay for the tenant’s relocation! That actually sounds fair, but the numbers on average rents in Santa Rosa mean it could cost the landlord $6000 on the average. Winning the vote might not do everything needed to curb rents sufficiently, but the fact that it might seriously reduce the number of evictions may be the real battle cry being shouted around the country by the realtors once the doors are closed.

This is one local election worth following closely, because winning might be the ripple that could start a tidal wave.

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Building a Fighting Force to Stop Evictions and Win Affordable Rents

ACORN Bristol

New Orleans    Tenancy is rising, and it’s expensive. People are being pressed up against the walls. The old rule of thumb that rent and housing costs should not be more than 30% of income, similar to the old Brooke Amendment named after the legendary African-American Senator from Connecticut, has long been in ruins.

This is a global issue.

ACORN affiliates in Scotland amassed to fight evictions in both Glasgow and Edinburgh in recent weeks. ACORN in Bristol is currently involved in a rent strike and has beaten back numerous evictions.

When we were recently in Detroit, we met with a very active and effective organization there called the Detroit Eviction Defense. The group meets weekly and was diversely populated with younger activists, retired union professionals, lawyers, former journalists, professors, and of course tenants. The actions and victories on their website is impressive.

Evictions are a growing issue.

Researchers, Joshua Akers and Eric Seymour in Detroit shared with us soon to be published data on evictions which were eyeopening to us. In a data set they had accumulated over the decade between 2005 and 2015, these University of Michigan whizzes had separated the nearly 7500 contract “purchases” from the total of 80,000 total acquisitions involving tax delinquency or foreclosure auctions. Although we had thought a primary part of the business model for contract pushers was evictions and indeed they generate more, but it was a matter of degree at 1 out 3 compared to 1 out of 4, between the two, with both at outrageous levels.

A paper by the researchers connected to the Federal Reserve Bank in Atlanta, led by Flora Raymond (and shared with us by our wolverine comrades) notes that Atlanta is out of the box compared with other cities and no small part of this issue is driven by the increased corporate ownership of rental units and businesses that make evictions and the collection of late fees a fundamental part of their business model, similar to the recent news reports of the Kushner operation’s methods in the Baltimore area. The paper notes that,

In Fulton County, an average of 107 eviction notices are filed each day, for a yearly total equal to 22 percent of all rental households. In Milwaukee … 16 percent of all rental families are evicted. A similar rate occurs in Fulton County, where 15 percent of all rental households are evicted. Eviction rates are highest among multifamily rentals, but they are also prevalent in single-family rentals. We find that large corporate owners in the single-family rental business are more likely than small landlords to evict tenants, even after controlling for parcel level and neighborhood-level factors.

Our Home Savers Campaign is finding that our members are frequently entering the predatory land installment contracts not because they are wide-eyed about becoming home owners, but even more frequently because they are desperate for affordable housing regardless of condition, if they think they can manage the lower monthly payments, regardless of the predatory scam.   Something is happening here, Mr. Jones!

It’s been widely reported and at the grassroots level, painfully realized, but Raymond and her co-authors state it plainly,

The number of renters with high housing cost burdens has reached record levels in the United States. Over 21 million households spend more than 30 percent of their income on rent; 11 million of those spend more than 50 percent, which is considered severely cost burdened. Much of the increase in households reporting housing insecurity can be attributed to soaring rents as demand for rental housing climbs (Joint Center for Housing Studies of Harvard University, 2016).

Add it up and the numbers are staggering. About 27,000 evictions in Atlanta’s Fulton County every year, and eviction rates in Milwaukee at 16%, Chicago 7%, Cleveland 11%, and the beat goes on and the family and community tragedy it represents increases. Take 21 million paying more than 30% of income on rent and another 6 million contract buyers, and millions of renters facing the street over and under these figures who are facing eviction, multiply them by all members of their households, and we have a huge constituency that would seem to be ripe for both organization and action.

Like the old buffalo hunters, I’ve got my ear to the ground to see if I can hear a movement coming.

Please enjoy Blackleg Miner by Offa Rex (The Decemberists & Olivia Chaney).

Thanks to KABF.

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FNMA Opens a Crack in the Predatory Land Contracts Wall

New Orleans   Fresh off our meeting and work in Detroit, the Home Savers Campaign got a break. In response to Baltimore Congressman Elijah Cummings complaints about Vision Property Management, the national rent-to-own operation’s lack of cooperation with him and his committee, symbolized by the lead poisoning of children living in one of their contracted properties, FNMA banned VPM from participating in further purchases of foreclosed properties in REO auctions. Vision of course cried foul, but there was finally a crack in the wall that Vision and hundreds of other companies have built through impunity and predatory practices.

What was less clear about FNMA’s response was whether they were just trying to get the Congressman off of their backs or whether this is a real change of heart. Although in their announcement they indicated to the New York Times that they had investigated the various claims, the nature of their investigations and the standards they used to bar VPM were not disclosed. It was also unclear that they were looking past VPM to the other companies that are bleeding lower income and working families in the same way. Furthermore, while Fannie Mae has stepped up, Freddie Mac is still cowering in silence even though they were also asked by the Congressman to ban Vision.

The Home Savers Campaign is drafting a letter to demand that FNMA bar any company from their auctions that relies on “as is” contracts for contract land sales or rent-to-own agreements. In Pittsburgh, Akron, Youngstown, Detroit, Memphis, Philadelphia, and other cities, we have found that this “as is” language is a license by not only Vision, but all of the companies in this sector to push properties into the hands of families desperate for affordable housing on any terms. Many times the companies are relying on the gray area of whether they are contracting with families who can claim to be tenants and access some rights available to them as tenants, depending on the city or state, or whether the families are now putative “owners-to-be” and allowing them to escape the strictures of local and state regulations.

The Toledo, Ohio ordinance makes it clear that such families in any manner of contract land purchases have to have a warrant of habitability before any contract can be validly signed and the family allowed to move in. The devil is in the details though when it comes to enforcement. Lawyers and tenant advocates told the campaign in Detroit that there is also a similar warrant of habitability required in that city, but there is no enforcement so it’s a dead letter.

The Home Savers Campaign intends to demand that any company operating with “as is” language in their agreements should be barred from accessing any property through auctions or sales foreclosed or delinquent homes in order to dam the flow of properties upstream to these predators. Enforcement or no, that will ensure in the future that companies have to ensure at least that minimum standards have been met in these homes, before desperate families are allowed to live in them. Additionally, any work done by the families before they receive the deeds should be reimbursed for out-of-pocket expenses directly or be discounted in the sales price.

Families desperate for housing cannot be the ATM for predatory housing schemes and the companies, big or small, that are running these scams.

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Vision Rent-to-Own “Buyers” Meet and Find Out Every Deal is Different

San Francisco  The first organizing meeting in Detroit of the Home Savers Campaign had spirited discussion when families discovered that they only had one thing in common in the contracts they had signed with Vision Property Management or its subsidiaries: the contract itself. When it came to the terms, to everyone’s shock and anger, everyone had a different deal!

The differences were not simply where we might expect to find them in the price of the houses they were hoping to buy or the number of years to term. In fact the prices were all very close to each other. As the campaign has come to expect from visiting so many families in Pittsburgh, Philadelphia, Akron, Youngstown, and now Detroit, some families attending the meeting were still shocked to find out that in seven years they would not own the home as they expected, but simply face wrenching choices between balloon payments, long term agreements, or walking away from extensive investments in money and labor in repairs.

The differences in the contracts were huge. Excitedly talking about their contracts, they found for example that in some contracts as little as $14 of their monthly payment was going to principle on the purchase while in others as much as $150 was being applied. That was often the case when the payments were virtually identical. In several cases, they discovered they had not been clearly told how much of their payment was going to principle at all. Even when the purchase price of the houses were roughly equivalent, families were finding that the amount of their monthly payment being applied for insurance was often different.

Looking at the question of tax payment which is especially freighted with concern, since nonpayment of taxes to the county could lead to loss of the property on tax delinquency sales. Only one family could determine from their payment the amount that was supposedly being paid to taxes, while the other families at this first organizing meeting became worried that since there was no indication, Vision might not be paying their taxes at all. Even in the one case where the tax level was stated at $150 per month or $1800 per year, there was skepticism that the house valued so modestly really was sustaining such a relatively high cost compared to true value.

Many of the people at the meeting were also on their second contract with Vision. The first had given them up to 45 days to make good on their payments, while the more recent gave Vision the right to void their option to purchase if they were late on the payments at all, making the contracts essentially no more than rental agreements, despite the fact that this was a triple-net lease with the “buyer” paying everything including thousands and thousands in repairs. One family was livid having invested over $50,000 in repairs, yet still debating whether or not they should walk away. Everyone at the meeting shared stories of about the “fishing” Vision’s representatives did with them over the phone to try and suss out the amount families had invested themselves in repairs, presumably for the company to guess whether the property might have been fixed off enough for them to seize the first opportunity to evict and flip.

People were happy to meet, but that was the only happiness in the room once the members and organizers cleared the fog away that hung over the legalese of the agreements. There was anger and plans for quick action. On the question of fight or flight, people were ready to fight. Powered by people, the campaign now begins in earnest.

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