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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Where are Seniors in the Fight for Social Security and Pensions?

New Orleans      I’m scratching my head.  Somehow, I’ve noticed something weird around the world, and it’s not adding up, or at least not adding up the way it should.  Maybe you have noticed it as well.  There are a lot of protests here and abroad about cutbacks and threats to pensions and benefit programs, but, surprisingly to me, they are being led and populated mainly by younger people without much participation by actual beneficiaries who are older or claimants.  What’s up with that?

In Nicaragua there have been days of protests led by young people over the government’s proposal to cut social security benefits to pay for rising medical costs.  In this instance social security is meant in the global sense of benefits for the unemployed or unable to work, rather than the United States linguistic politicization that terms any benefits, earned like unemployment or given as welfare complete with all the cultural baggage that carries.

In England university workers struck for weeks over attempts to change the nature of the pension program from a defined benefit program to a defined contribution program.  Their strike was powerful, but what they have won so far is a delay for a study committee that many activists worry will not be satisfactory.

Unrest and protests have been rising in France over curtailment not only of hard won workers’ rights but also the Macron government’s actions to dismantle various welfare benefits and entitlements.

Young, largely female teacher strikers in the United States have protested and gone on strike in recent months and among their issues have been protecting deterioration of pensions.

Where are the pensioners?  The seniors?  The recipients?

Some are there for sure, but too many are leaving the fight to their children, literally and metaphorically speaking.  At some level there’s simply an air of defeat, a sort of “I did my best, so good luck to the rest.”  Or worse, an attitude of “I’ve got mine, too bad about you.”

If welfare recipients and seniors are not protesting, isn’t it too much to ask young people to lead the fight?  Honestly, ask yourself, how many young people trying to survive in gig and informal economy jobs, find homes, lovers, and friends, have time – or interest – in what they might need in bad times or twenty, thirty or forty years from now.

Politicians and governments are counting on this indifference from the young and old.  Changes are often red-circles to exempt the old or punish the young in the future while there are not yet fighters even old enough to take the field in their own interest.

Seems like solidarity, good citizenship, and love of our families, friends, co-workers and communities demands those of us who understand the benefits and stand towards the front line, need to also be among the first to put our feet in the streets to stand up for the importance of these benefits to the quality of life, if not survival, for tens of millions.

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