Detroit Housing Crisis, Progress but a Long Way to Go

Detroit    The panel organized by the Detroit School at the University of Michigan – Dearborn had an ominous title: “Post Crisis Housing Markets and Housing Insecurity.”  In Detroit, not unlike so many other cities around the world now, when you couple “Post Crisis” and “Housing” in the same phrase you are definitely either very hopeful or asking for trouble.  The housing crisis in Detroit as been horrid for half-a-century at the least, so post-crisis referred to the 2008 national meltdown of course.

The crowd on a miserable winter night in Detroit, which is to say, a normal winter night in Detroit, was deeply informed and hugely engaged.  The panel was authoritative.  Christine Macdonald of The Detroit News and Allison Gross of the Free Press had both deeply reported on housing issues, were well versed and knew the players on all sides of the field.  Professor Josh Akers from UM-Dearborn and his colleague Eric Seymour, a PhD now at Brown, had deeply researched the housing market and the level of insecurity for families.  Both had been wildly helpful to the ACORN Home Savers Campaign in getting a handle on companies operating in the margins with sometimes questionable and often predatory products often contributing to housing insecurity.

Professor Akers, as the moderator, gave the background and the numbers of foreclosures, the impact of subprime lending, and the level of continued abandonment were unsettling, no matter how often I had heard them.  The reporters unpacked the impact of recent programs like the “right of first refusal” which allowed the city to pick up homes in foreclosure and potentially offer them back to families at real or current market value, rather than the pre-2008 recession levels.  They shared the problems they faced in keeping these stories flowing in the exhaustion of their editors, and perhaps the public, felt in facing this continual train wreck.  Eric Seymour filled in the gaps that both he and Akers had worked on to supply both reporters and ACORN with the raw data to fuel their reporting and our work.

As Greg Markus, a retired professor and key organizer with Detroit Action Commonwealth, pointed out in the question & answer after the panel, the twin crises of mortgage foreclosures from the banks and tax sales triggered by the government had deepened the crisis in Detroit.  He argued as well that the ACLU suit that upbraided the city for not allowing low income families to take advantage of the tax exemptions that has now slowed the auctions as well as the work being done by reporters, scholars, activists, and community organizations showed real progress moving forward.  Christine Macdonald nodded but pushed back that none of these things repaired the damage to families who had already lost and been ejected from their homes or the permanent scars it created in the neighborhoods.

It was an excellent conversation without real joy.  There is great work happening in Detroit, but too much of the effort for too many decades has been Sisyphisian with the rocks almost getting to the top of the hill, then pushed back down again.  I mentioned a memorandum I had stumbled on in the ACORN archives from 2003 from the Detroit ACORN office on a collaboration with the City and its financing to allow families to rehab houses and then waive taxes and purchase requirements.  Then the numbers of houses abandoned was 30,000.  Now, the land bank alone has perhaps 80,000.

This is where the fight has to be joined, but whether a model for the future that would assure housing stability can be found without a radical rethinking that puts families and not realty interests and developers first is still very much in doubt.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Self-Dealing Revenge from OCC & Treasury Targets the CRA

Greenville   Sometimes you wonder why former Goldman Sachs and banking executives flock to political jobs like running the Treasury Department or the Office of the Comptroller of the Currency, but then you realize the facts.  It’s about score-settling or figuring out how they and their buddies can make more money in banking now and in the future.  The backstory on the current push to rewrite the rules on the more than forty years of the Community Reinvestment Act or CRA that mandated fair banking and the end of redlining to force banks to invest in lower income and minority neighborhoods is full of just such conflicts of interest and self-dealing.

As the Treasury Department and the OCC propose to rewrite and dilute CRA rules the Wall Street Journal reports that the issue is messier. Steven Mnuchin was bottom fishing after he left Goldman Sachs as an investment banker and flirted with financing in Hollywood.  He had assembled a group to pay $1.5 billing to buy IndyMac from the FDIC after the highflying, lowballing mortgage chop shop suffered a run forcing the FDIC as the deposit insurer to take over.  Mnuchin hoped to paint lipstick on the pig, resell it or take it public for a killing with his buddies.  One of his buddies was Joseph Otting who he recruited to run OneWest, the name of the newly whitewashed bank.  This was all capitalism at the roulette wheel.  Mnuchin and Otting got an offer to sell to CIT Group for $3.4 billion that would allow the investors to turn a profit of over $3 billion in 2014 after only six years.

Cha-ching, here come the filthy rich, isn’t greed great.  Yes, until they realized there were rules and regulations in the new west of OneWest.  They still had a portfolio of the stinking mortgages that had given them the bank in a fire sale in the first place, meaning that they had CRA obligations.  Any time a sale of this kind happens over the 40-year period CRA as ACORN and any organization – or bank – worth its salt knows, that opens the window for Federal Reserve and other reviews of the banks lending practices.  More than just some bad mortgages were stinking up their California lending experience in their get-rich-quick scheme and several organizations including the California Reinvestment Coalition and the Greenlining group filed challenges to their lending record.  None of this is new.  Groups including ACORN and scores of others have followed the rules and negotiated agreements for bank lending that has now surpassed a trillion dollars in low income neighborhoods.

The new west robber baron wannabes, Mnuchin and Otting were offended that they were challenged.  They tried to buy the groups off, but the groups had clear demands.  Mnuchin and Otting were offended at the impunity of community groups thinking that they had the right to negotiate for loan equity in the community.  Eventually they pledged $5 billion in loans to the community, which was less than the demands, but miles more than they intended.

CRA has benefited millions of people who were able to buy homes.  Mnuchin and Otting had their feelings hurt and their entitlements challenged.  Now Mnuchin is Secretary of the Treasury and Otting is Comptroller of the Currency.  They vowed to get even, and their revenge will be diluting CRA and preventing millions from owning homes in the future because of the act’s guarantee of fair banking and procedures that assured it.

As President Trump would say, “sad!”

Facebooktwittergoogle_plusredditpinterestlinkedinmail