Terrible Idea of the Day: Evict Public Housing Tenants!

New Orleans     Almost everyone else in America knows that we have a national affordable housing crisis.  Maybe someone in Washington could take a minute out of their day pop by or send an email to Dr. Ben Carson, the head of Trump’s Housing and Urban Development (HUD) operation responsible for housing and give him a clue about the housing dilemma facing lower income families that is his responsibility by law.

Not having a clue, Carson is now proposing to take several draconian steps to punish the poor in public housing.  On one hand he is trying to time-limit public housing so that it is a temporary benefit rather than long term based on income.  This proposal affects millions of low income families.  Work requirements would be part of the package.  On the other hand, Carson wants to triple the rents of the poorest of the families in public housing or benefiting from section 8 housing support vouchers in private housing by raising the minimum rent from $50 to $150 over a period of time.  This proposal over time would hurt 750,000 people according to HUD.

I have to wonder where Carson and HUD, along with their governmental pushers and enablers, think that people will go if they are priced or timed out of public housing? Perhaps the streets?  No, that wouldn’t work.  The rich and politicians don’t like vast and increasing numbers of homeless on the streets.  The only thing certain is that they will hope and pray that the poor are invisible to them, which seems the only policy that has their full commitment.  But, wait, I must be pretending that they care about the consequences of these policies rather than allowing them to be purely vindictive.  My bad!

The puppet master for this proposal now being mouthed by Carson seems to be budget director Mick Mulvaney.  Yes, Mick Mulvaney, the same public servant who is doing double duty trying to destroy the Consumer Finance Protection Bureau.  He rivals President Trump these days in dominating the news cycle.  Today he was not only trying to destroy public housing supports, but he was also trying to block public access to the CFPB’s popular database of complaints from consumers.  Even better he was revealing his “pay to play” policy while he was a congressman by meeting with lobbyists first and foremost if they had donated to his campaign.  He offered this obvious insight to a group of bankers about why they needed to put more dollars into buying other congressmen if they wanted to gut the CFPB and Dodd-Frank.

There’s a lesson here of course.  After decades of dismantling public housing, millions stuck on waiting lists around the country for section 8 vouchers which are not an entitlement, the crash of the real estate construction market after the housing speculation bubble burst, the creation of the credit desert and slowdown of construction financing for affordable housing, rising rents and record eviction rates, the problem turns out to be that these damn poor people didn’t pool enough money and food stamps together to pay lobbyists and bribe politicians like Mulvaney with campaign contributions.

Darned, why didn’t we think of that!

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Contract for Deed as a Non-Profit Affordable Housing Tool

New Orleans   Thinking about how to open up a pool of potentially affordable housing to low-and-moderate income families, ACORN’s Home Savers Campaign has spent a lot of time visiting with people in various Midwestern cities trying to figure out a way to link abandoned housing stock in land banks with the potential for rehabilitation with families that need affordable housing.  There seems to be some appetite from certain companies and investors, and there are huge numbers of lower income families that want rent they can afford or even ownership, if they could swing the payments.  Experience with housing counseling has taught us that credit scores can be improved sufficiently to qualify for even conventional mortgages.  The problem is the gap.  The period between when the house is ready and the family is still working to get its finances and credit in shape.   The missing piece in the puzzle is the bridge.

Contract for deeds and other forms of land contracts have been the target of the ACORN Home Savers Campaign because they are little understood and often highly predatory.  Yet, we have found that nonprofit housing groups in Akron and Youngstown, Ohio, and Detroit all use various short-term land contracts to solve this problem in communities where banks are hesitant to take risks in lower income housing markets.  Theoretically, even long-time organizers in the fight against land contracts believe it is possible to devise such instruments in a constructive way, despite their existence in a grey area of few to nonexistent regulations.

Surveying the field, the answer we have found so far is that maybe such contracts might work.  In Youngstown, some housing organizers and advocates claimed that the nonprofit contracts were worse than some of the for-profit operators.  The Housing Authority says that it has lost money on its half-dozen land contracts.  In Akron, there are several nonprofits using land contracts in various forms on rehabbed houses.  In Detroit, United Community Housing Coalition uses a short-term contract for a couple of years successfully to establish a credit record for families trying to regain their foreclosed properties so that they can refinance.

A 2013 case study by the Federal Reserve Bank of Minneapolis on the use of contracts for deed as a bridge for lower income families detailed favorably the experience of the Greater Metropolitan Housing Corporation (GMHC) in the Twin Cities.  Their SHOP program which stands for Sustainable Home Ownership Program started in 2008.  Bridge to Success was the contract for deed program.  A SHOP-approved buyer would find a home and then SHOP would take possession and hold the deed for no longer than ten years, while the buyer would be able to deduct interest and taxes after making a 2% down payment on houses that average $126,000 and could not be priced any higher than $225,000. Once buyers have their credit straight they are assisted in converting to a mortgage.

Sounds good doesn’t it?  In 2013, they had financed more than 60 homes and had a goal of building a loan pool through Bridge to Success of $50 million that would give them the capacity to purchase 400 houses.  Checking now in 2018 on their website, when I hit the section for “contract for deed” under financing, it took me to a page that said the program had been discontinued.

What happened?  The theory was good.  The early experience was solid.  Was it the land purchase or something else?

Meanwhile we continue to search for the right piece to solve this puzzle.

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