Donors Muscling Democracy in Detroit

QPIMG_5892New Orleans No matter how jaded we might be about the ways and means that the deep pockets of philanthropies muscle up and try to force their will on desperate grant seekers, the article in the Wall Street Journal by Matthew Dolan, “Revival Bid Pits Donor Against Detroit,” was a shocking tale of arrogance, elitism, and autocracy by Rip Rapson and the $3.1 billion Kresge Foundation.

Reading the article it was hard to see any controversy.  Rapson and Kresge had backup on their heels in a face of wills on whether or not they knew what was best for Detroit and could impose their “vision” accordingly or whether or not the newly elected reform mayor and former NBA basketball player, Dave Bing, and the citizens should drive the process.  Clearly they were flat ass dead wrong and the article couldn’t have been clearer.

The foundation had put money into Detroit Works, a standard issue, consultant driven planning apparatus for looking at Detroit’s future similar to what virtually every city in the US has tried to unite business, labor, and other “stakeholders” to come together behind a plan.  Bing had put the operation together before he was elected as a transition vehicle for his emerging government.  Nothing much of a surprise here either.  It’s all standard issue in big time, big city politics.  The difference here is that Bing was elected and, appropriately, moved to integrate planning and other functions in city departments and, as mayor, make sure everyone got their fair say.

Rapson seems to have petulantly pulled Kresge’s money out of Detroit Works trying to insist that an outside planner from Harvard recruited earlier to run roughshod over the local players still got to push the program.  He also doesn’t like the way a rail plan is developing and the fact that the City of Detroit wants to drive the engine, not Kresge with him wearing an engineer’s cap, so he’s also suspended the foundation’s money there, arguing that without Kresge the project is DOA.  Whoa, doggie!  Kresge’s big bucks do give them a big stick and a loud voice because unfortunately that is the way things work in America, but didn’t he at least read a couple of the pages in the foundation executives’ handbook that says they should at least pretend they care about what others thing?  What country is Rapson from that he thinks this is the way the world works?

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Foreclosure Modifications, Killed by the Cure

Bailout OversightNew York City When the Inspector General of the Treasury Department starts agreeing with me that the Treasury Department and the banks are totally messing up the HAMP – Housing Modification Program – you just know it must be terrible!  And it is…according to a recent report in the Wall Street Journal by Jessica Silver-Greenberg:

The program “has undoubtedly put people into foreclosure,” says Neil Barofsky, the special inspector general overseeing the Troubled Asset Relief Program, which funds HAMP. “It’s a parade of documentation horrors.”

In a report to Congress on Oct. 26, Mr. Barofsky concluded that some borrowers seeking loan modifications through HAMP might wind up “worse off than before they participated.” Back payments, penalties and late fees triggered when homeowners are rejected for a permanent fix can push some borrowers over the edge, he said.

The medicine kills them when it turns out, as Arizona Advocates and Actions (www.advocatesandactions.org) has documented repeatedly, there are pre-approved or given verbal instructions to modify payments and then through repeated paperwork snafus, the banks renege and leave the borrower stuck very far out on the limb.  They do not hesitate to dog pile the borrower then with add-on fees, late payments, and all manner of predatory charges because the borrower was following their instructions. Yet the program requires that the borrower has to successfully make 3 payments on the modified terms, so in no time the borrower is stuck like chuck.

But of course there’s no accountability at the top or the bottom.

“The Treasury Department doesn’t record how frequently errors occur with documentation on home loans submitted to more than 2,500 financial institutions and servicers empowered by the U.S. government to grant and reject HAMP requests. An outside review of borrowers denied permanent modifications disagreed with the servicer’s decision in 4.8% of the loans during the fiscal quarter ended in August.”

Our experience is that an error rate of 5% is way, way too kind to the financial predators at the table here.  But even noting that 1.4 million people have been tossed out of the program thus far (against the Obama Administration’s original goal of 3 million modifications), a 5% error rate would be 60,000 homeowners.  That number of mistakes along would decimate home communities in many states around the country.  Put the error rate more reasonably at 10 to 20% and we are dealing with 120,000 to 240,000 homeowners that could have saved their houses, but instead have been wrongly excluded and bounced to the street.

It is unbelievable that this can’t be fixed!

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