Affordable Housing Versus Any Housing at All

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http://www.sfbarf.org/pages/pictures.html

New Orleans    There’s starting to be an emerging pressure confronting housing activists and organizations, or so it seems: the fight between affordable housing versus any housing at all. The fight is particularly pronounced in the “executive” cities where most people can no longer afford to live, like New York, London, San Francisco, Vancouver, and the rest, but it also is being waged neighborhood to neighborhood under pressure of gentrification.

A recent article in The New York Times featured a self-proclaimed anarchistic, contrarian voice from San Francisco called BARF, the Bay Area Renters’ Federation. Yes, they thought the name was funny. These activists, what can you say? Essentially, they had adopted a position in the desperation of the situation in San Francisco that was essentially “anything goes,” as long as it means more housing, affordable, luxury, whatever. Longstanding tenant organizations in San Francisco called BARF, the “Tea Party” of housing groups in the city, which pretty much defines a “how low can you go” put down.

There may be worse though, and I stumbled on these notions reading a column in The Economist reporting some of the bright ideas that economists have. This is The Economist though so don’t be surprised that the argument starts from a position, similar to BARF, that development is good, and even alleges that everybody loves development, the problem is that no one wants it where they live, they want it somewhere else in the city.

Nonetheless, the ideas were, to say the least, novel. One was a straight “pay to play” proposition. Developers wanting to build in a particular area where they might counter community opposition would offer to pay neighbors in the area in cash money for the inconvenience and upset they had about the development. The exchange there was almost the equivalent of paying for “mental anguish” or some such. Taking it a logical next step though, neighbors willing to have their silence or support bought could also try to trade their position for whatever they believed the loss of value in their property might be.

In some ways this proposal isn’t so novel. Forever big developments in rural areas have bought out landowners wholesale to split communities. Developers reportedly buy out tenants in cities where they have protected leases in order to redevelop buildings in “executive” cities now, so what may seem on its face absurd, actually may be a more common practice than we realize. Many so-called neighborhood associations are so dominated by local real estate interests and individuals that it can be hard not to see them already as developer lapdogs. And, of course, when politics and money mix, this kind of business is also routine. The Mayor of New Orleans in a pique over a competing developers complaint that another developer won a bid to deal with a city building, is trying to get legislation through the state that would force any litigator in the future to have to put up a bond for the lost revenue, etc, etc, etc. You get the picture.

Another unique proposal offered was a sort of community “blackmail.” If a neighborhood fought a development in their area, essentially an ordinance or statute would require them to support a development elsewhere in the city of equivalent value and impact. The premise behind the proposition is, once again, that all development is good and beneficial, any opposition is narrow and selfish, so if you protest, you eventually pay the piper and have to saddle up to screw another community elsewhere in the city. Either way, the one thing that is certain is that the development gets built.

We might think some of these proposals are just ridiculous, but doing so is at some peril. Take a quick look at the political contributions in virtually any city for the municipal officeholders, and usually you will see the who’s who of all the local and many national developers lining up with cash, usually for candidates on both sides in the election so that they have markers down on all the candidates, as well as of course the eventual winner.

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Has Community Reinvestment Become the Ghetto of the Banking Industry?

12.12.12-HousesNew Orleans   Since the financial crisis many of us who believe in decent and affordable housing have spent time making sure the Community Reinvestment Act (CRA) didn’t become the goat for the financial meltdown and banking scandals. And, don’t get me wrong, that’s important!

In a 2015 Federal Reserve study the conclusion was clear: CRA was blameless. Only 6% of loans by banks in CRA-qualified census tracks would have qualified as high risk. The repayment rate for CRA-based loans was equal or better than other loans in banking portfolios.

Nonetheless recently I finally felt like I might have stumbled on a disturbing pattern when I started thinking about the array of CRA officers populating various banks and I then started to worry that there might be another side to the CRA story that needs attention, and that’s whether or not it has become a banking ghetto populated more by politicians and promises than real efforts to move families into housing and desperately needed resources and loans into lower income communities.

For example, the National Community Reinvestment Coalition claims that approximately $4 trillion in CRA commitments was promised between 1997 and 2005. And, that’s good news and ACORN’s experience was that much of it was delivered on our agreements, as I detailed in my 2009 book, Citizen Wealth. On the other hand the word “promised,” when it comes to minority lending and lower income communities always makes you wonder. The Federal Reserve report for example quoted testimony given by JPMorgan Chase to the Financial Crisis Inquiry Commission that “less than one-fourth of the loans pledged in the largest-ever CRA commitment ($800 billion by JPMorgan Chase) were to the lower-income borrowers and neighborhoods targeted by the CRA.” When forced to fess up, Chase essentially was admitting that their pledge was a scam. They also quoted a “Citigroup managing director… that most CRA commitments ‘would have been fulfilled in the normal course of business.’” Having dealt with Citigroup for years, that’s simply a lie. Nonetheless, it’s worrisome that these big hitters in the CRA lending world are essentially saying they were playing all of us for fools. Admittedly, they were also trying to save their skins before the Commission, but I’m afraid the truth may also have been slipping out.

And, then there’s a pattern I started to wonder about when thinking about the CRA officers we run into from bank to bank these days. There’s a high incidence of what seem to be political appointees rather than real bankers who might be able to move money rather than simply bring calm to stormy seas. On the local scene just to think about a random selection, there were several current African-American legislators still in office, a relative of a former Mayor, and a social friend of the CEO…are you starting to see the picture? Nationally, I remember dealing with an African-American former mayor of Minneapolis and the scion of a long standing black political powerhouse family from Buffalo.

Maybe we need some solid research of our own on whether or not big and little banking is really committed to CRA objectives and non-discriminatory lending in minority and lower income communities, or whether or not we’re being played by politicians in banker’s suits making promises while continuing to grip the money with an ever tightening fist?

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The Legacy of Fighting Blockbusting is Residential Diversity

photoshop-not-for-sale-dissolve-blend-stamp-000New Orleans   Studies of the largest 100 school districts in the United States indicate that there is such extensive re-segregation that schools are more segregated now than they were almost 50 years ago. Research on communities indicates that racial segregation in housing is part of the vicious cycle driving continued segregation in city after city. Sadly, the contemporary realities make fights like the campaign against racial blockbusting waged in Little Rock’s Oak Forest neighborhood 45 years ago by ACORN and its leaders like Walter Nunn, who I interviewed on Wade’s World, still very relevant.

Walter told the story of ACORN organizer, and now prominent Little Rock labor lawyer, Melva Harmon, contacting him at his home after hearing from other neighbors around the Oak Forest community that they were being solicited by unscrupulous real estate agents to quickly sell their houses because “blacks were buying into the neighborhood.” The strategy behind such panic-pedaling was to convince owners to sell cheap so that they could then flip the house at a higher price by marketing to black families hoping to buy homes in a stable, quiet neighborhood of single-family residences. In the case of Oak Forest the neighborhood was the last stable residential area abutting the University of Arkansas at Little Rock and University Avenue. The whites in flight would go farther west to the sprawling suburbs that other powerful real estate interests at the time were developing into suburban subdivisions farther and farther from the core of the city.

Walter Nunn and his neighbors organized the Oak Forest Property Owners Association with ACORN and with an extensive doorknocking program to families throughout the neighborhood essentially said, “hell no, we won’t go!” Signs went up everything, house to house, that said in big letters: THIS HOUSE IS NOT FOR SALE, ACORN. It was amazing to drive through the neighborhood and see the signs everywhere. It was impossible for the press to ignore. A group in Los Angeles arranged for some public service advertisements for us to run on the radio stations in Little Rock that were also big news. Carroll O’Connell, then in his Archie Bunker heyday was one of the voices on the spot. Jack Nicholson famous from Easy Rider, Five Easy Pieces, The Shining, and now an arm’s length of films was another distinctive voice warning people against blockbusters, saying it was illegal, and asking people to call ACORN, as was Ryan O’Neal.

The group proposed an ordinance to the Little Rock City Council to toughen the rules against blockbusters. Walter remembered only Jack Young and Les Hollingsworth on the City Board of Directors, both endorsed by ACORN, had supported them. Nonetheless, his highlight memory was getting up to speak and then dramatically brandishing the dozen or so business cards from real estate agents they had collected from neighbors who had personally heard the racist pitch to sell, move, and run.

Where the balance shifts to tipping points in neighborhood after neighborhood, it can seem impossible to restore healthy diverse communities. I asked Walter if he had been back to Oak Forest in recent years, and we were both proud to hear his report that Oak Forest still would qualify on such a list.

These were great fights. Maybe we need to reverse the field and have more of them that are about diversity, rather than gentrification.

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“Contract for Deed” Housing Purchases are Predatory and Discriminatory

House and Money with Pad of Paper and Pen

Little Rock   Reports indicate that more than three million people have bought houses under “contract for deed” purchases. Since many, if not most, of these kinds of housing purchases are not recorded, who really knows what the real numbers might be. The one thing that can be certain, is that the happy buyers, meaning the precious few that ever actually end up with a deed, are the very rare exceptions proving the rule that this is a gray, desperate part of the housing market founded on predatory practices and discrimination.

I’m always surprised this part of the housing market is not either strictly regulated or banned. I first encountered such “contract for deed” purchases in Little Rock, Arkansas in 1972 as ACORN mounted its “Save the City” organizing drives neighborhood by neighborhood in the central and eastern parts of the city. Six years before the passage of the Community Reinvestment Act banning lending discrimination based on race among other reasons, it was very difficult for many African-Americans to get mortgage financing historically. On the doors we would regularly run into people involved in “contract for deed” or “rent to purchase” agreements with landlords or absentee owners because of their inability to get bank loans or FHA guarantees in previous years to acquire the home outright. We heard one story after another from older members about either having lost houses or almost lost houses because of some snafu or crisis when their payment was a day late or lost in the mail or whatever. Some were just plain robbed, having paid in cash with no recourse in courts or often even a paper trail. How do you prove the existence of a paternal handshake over a piece of real estate you’ve lived in for 15 or 20 years? We tried to get such sales banned in Little Rock, despite the fact that the real estate industry was the most powerful force in the city.

Many states allow “contract for deed” transactions though they are lightly regulated with almost nonexistent oversight by strapped city housing departments. The Times recently did a piece that highlighted a Dallas-based slumlord named Charles Vose, III, who owns Harbour Porfolio Advisers and has been one of the largest purchases of distressed properties from the government. They reported that,

…Harbour has bought more than 6,700 single-family homes in Ohio, Michigan, Illinois, Florida, Georgia, Pennsylvania and a handful of other states since 2010 — most of them from Fannie Mae, according to the mortgage finance firm and the foreclosure research firm RealtyTrac.

One tale followed another including onerous requirements to repair a home in 4-months or default on the contract purchase, more than 100 times that the company has sued in bankruptcy court, hiring a captive firm to appraise the houses condition sometimes indicating no repairs being needed, all in the service of swindling a lower income family wanting to realize their dream of home ownership but not having the credit under current standards to enter the standard housing mortgage market. We could say that there “ought to be a law,” but in fact there seem to be plenty of laws, including housing code requirements, but nothing stout enough to stop the predatory cycle where a Vose lives in a Dallas mansion by stealing the homes of poor, usually minority families, and everyone else tries to turn a blind eye and shift the problem houses off of their books and onto someone else’s until the exploitative music stops.

The government at all levels shouldn’t allow it and should do the right thing upstream by funding rehab or demolition, rather than allowing the swindlers to operate downstream, hurting even more families and damaging communities, already beleaguered and often blighted, even more so.

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Right to Housing but a Catch-22 for Tenant Rights in England

picture taken by ACORN in the Newham borough of London where we are organizing

picture taken by ACORN in the Newham borough of London where we are organizing

London   Meetings with the director of the newly formed Tenants’ Foundation, the director of Generation Rent, and ACORN United Kingdom’s organizing coordinator and head organizer in London yesterday was a deep dive into tenant rights — and wrongs — in England. The big picture is dire for tenants throughout the country, and most intensely in London. For most low-and-moderate income families home ownership is a myth expect perhaps in Northern England, so the trick is how to survive as a tenant in a time of dramatically escalating housing values, and therefore soaring rents sucking up increasing levels of family income.

The maze is yet harder to navigate with the drastic reduction in social or public housing units where rents are lower therefore moving people into tenancy under private landlords where rents are unlimited and rights are more constrained. For lower income families the imposition of the “universal credit” program with hard caps at 26000 pounds and likely falling to 23000 pounds including all forms of assistance from housing benefits, unemployment or other support, regardless of family size or circumstance, often means disaster.

If we often argue that property rights are the most fundamental and foundational rights in the United States, we may only be guessing at how sacred they are in England. I was most confounded by what seemed institutional “redlining” and legalized de facto discrimination against benefit recipients or claimants, as they are known in England. Nominally, there are non-discrimination laws in England offering protection from discrimination based on race, gender, religion, nationality, and sexuality. There is no protection for discrimination based on income or employment status, so it is in fact legal for private landlords to refuse to rent to benefit claimants.

England allows mortgage lenders and insurers to redline by charging landlords more if they rent to claimants, thereby directly discriminating against poorer or displaced families in wholesale fashion. A housing rights website notes the painful paradox:

[England’s] anti-discrimination legislation protects people from both direct and indirect discrimination. Indirect discrimination occurs where a policy, which is not discriminatory in itself, if likely to impact disproportionately on people who are protected under equality laws. Some people may argue that this type of policy could be seen as indirect discrimination if, for example, housing benefit claimants were predominantly female or predominantly from an ethnic minority group. However, this type of discriminatory practice can be legal if it can be reasonably justified. A landlord whose mortgage lender imposed these conditions on him or her would be justified in adopting this practice.

Private landlords have reveled in being able to discriminate and are taking it to the bank. Their own testimony indicates how rapidly they have decreased available housing stock for the poor or dislocated. In testimony their association has said, “…in the last three years there has been a 50% drop in the number of landlords taking people who are on benefits. It is now down to only one fifth; 22% of our landlord members whom we surveyed say they have LHA tenants, and 52% of those surveyed said they would not look at taking on benefits tenants.” Almost as bad, different from US section 8 programs, landlords do not apply and are not inspected to insure that their housing is safe and meets habitability standards, so rule the roost completely.

Because there is a “right to housing,” if evicted, and evictions are going through the roof, a family can go to their local borough council and ask for housing. With lengthy or frozen lists for social housing and recalcitrant landlords acting with impunity for the highest dollar in a tight market, such families have to be housed by the council, but often can’t be accommodated in the borough or even in the area so some uproot people and send them away, paying for them to stay more cheaply in Birmingham or anywhere they can find. They are also putting families up in bed-and-breakfasts, hostels, and just about anything this side of squats at a national price of between 25 and 30 million pounds, which many refer to as a private landlord subsidy.

Something has to give, but the backs being broken first are tenants, especially those who are the poorest, while inequality increases and London and other cities in England become harbors for the rich and simply way-stations and holding areas of others. All of us were talking about organizing, but, soberly, with the recognition that there are mountains to climb any direction we look from the bottom to the top, far past our sight-line.

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Home Stealing Swindles and Similar Crimes

$_72Baton Rouge   For years I’ve seen these almost handmade looking signs on street corners in our neighborhoods in various cities in the USA that say something on the order of “We Buy Old Houses, Call XYZ” or “No Matter What Condition, We Buy Houses” and so forth. In New Orleans it seemed part of the post-Katrina landscape, just like other signs that say, “I’ve Got a Backhoe, Call Me” or “House Gutting, Call Me.” Seeing those signs in other cities made me scratch my head but not hard enough to dent the brain until recently I read about several home stealing swindles preying on the elderly, uninformed, and lower income families.

The simplest swindle was a straight up proposition to buy a home with some age on it and some repairs needed and offer a hefty price, get the owner to sign over the documents based on a front end payment of a couple of thousand dollars, flip the house, and then stiff the original owner for a sucker. Invariably, the owner was desperate for money because of medical bills, payday loans, or whatever so overlooked the simple logic and fine print in order to get some real money in their hands while the swindler saw the switch as a down payment worth tens of thousands in their pockets. Worse, it’s horrifying how many get away with this swindle, much like a couple of years ago when shady mortgage brokers would dupe the elderly especially into refinancing their homes just to pocket the fees and points.

A more sophisticated swindle seems to take advantage of the modernization of county and parish property records on-line to speed transactions and increase transparency in the often burdened process of clearing titles and effecting sales at real estate closings. In some jurisdictions, virtually all of the records attending the sales are now visible online, often exposing not only a good facsimile of the owner’s signature for future criminal duplication, but also bank account numbers, social security numbers, and pretty much the whole package. Finding homes where there are absentee owners that rarely visit and inspect the property and often don’t have friends or neighbors keeping the extra eye out, allows the swindlers to come in, place the house for sale quietly, bring in a team of helpers to pretend to be the owners, and even con legitimate lawyers and title companies into handling the closing. The New York Times ran a story of an elderly woman who suddenly discovered a house she owned was sold out from under her for more than a half-million. She got lucky and the police did right, but we have to wonder how many times people get away with this kind of thing, and how many more may in the future. In red hot housing markets this may look like easy pickings.

Meanwhile, the big banks are still trying to muscle into the housing market to displace the federal lending authorities like Fannie Mae and Freddie Mac. Most of them have hardly paid off their billions in penalties and fines from their earlier crimes in crashing the housing market and now they think they should be trusted to control the whole shebang. Some reported the good news that homes that were underwater, where more was owed in mortgage than the value of the home in the market, had decreased from over 16% to only 13% and change in 2014. Some cities like Las Vegas, Chicago, and Atlanta are over 18% underwater in the market. Since 3 to 5% used to be the normal, and we are supposedly in recovery from the meltdown, it seems like we still have a long way to go with a lot of pain and suffering on the road.

Big swindles or small, no one can be too careful when there are so many vultures waiting to swindle homeowners on a regular and daily basis. Seems there’s always something.

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