Should FHFA’s REO-to-Rental Pilot Program Address Affordability?
Posted by Matthew Brian Hersh on May 15, 2012
Recently the National Low Income Housing Coaltion, as part of a blog series looking at discrimination in the marketing and maintenance of bank-owned properties, suggested that FHFA's REO-to-rental pilot program could serve as a gateway to address afforability by tying future REO-to-rental iterations to National Housing Trust Fund dollars:
We recommended that REO sales be paired with National Housing Trust Fund dollars to make some of the properties affordable to extremely low income households. Finally, we recommended that landlords and property managers must contractually agree to meet certain housing quality standards for all properties, whether or not a particular unit is subsidized.
But, as the post goes on to note, the pilot program is done an an "extremely small scale, with fewer than 3,000 properties included." The program isn't meant to address affordability, but should it?
We posed this question to readers last week and most respondents thought future iternations of the program should address affordability, even if this trial does not. Most who thought REO-to-rental should, at some point, address affordabilty felt that this could be one of several tools to create more affordable housing. Here are some selected resopnses:
"This is an incredible opportunity to increase the supply of affordabel rental housing; a supply far too small to meet the growing demand for affordable units across the country."
"Because it is and should be still the role of government to serve citizens who have less opportunity. This is the perfect chance to give a "bail out" to the American people vs. the banks."
"Yes, but it should be done as one factor, not the only one. There should be a longer recapture period or affordability period because three years is too short. Public funds have been used to bail out Fannie and Freddie. There should be a public good created that has a lasting effect—namely long-term affordability."
What's your take?
Post a comment
No More Excuses: Principal Reduction Will Give Relief to American Homeowners
Posted by Alan Jenkins on May 15, 2012
One by one, the excuses have fallen. Yet Edward DeMarco, acting head of FHFA, the agency that runs Fannie Mae and Freddie Mac, still fails to offer the most effective relief available to American homeowners struggling with mortgages held by those entities. Economists, housing experts, and members of DeMarco’s own staff have concluded that reducing to affordable levels the principal owed on at-risk mortgages is effective in reducing foreclosures and their destructive fallout. But, inexplicably, he’s been unmoved by the mounting evidence.
Last month, after hinting at a possible change of heart, DeMarco punted on the question, saying it needed more study and stating that such a policy question “should be determined by Congress.” But the evidence is too clear, and the stakes are too high, for further delay. It’s time for DeMarco to either act in the nation’s interest or get out of the way.
While many parts of our economy have gradually improved over the last several years, foreclosures are on the rise in regions around the country. The foreclosure data company RealtyTrac has predicted that one million American homes may enter foreclosure in 2012. An estimated 12 million Americans currently owe more on their mortgages than their homes are worth, meaning that millions more are at risk.
Continued... · Post a comment
How Would Ending the Census Survey Affect Our Work?
Posted by Matthew Brian Hersh on May 14, 2012
The U.S. House of Representatives last week voted to eliminate the Census Bureau's American Community Survey, in the latest move by this Congress to make ineffective government a self-fulling prophecy. Of course the census has been under increasing suspicion for some time now (never mind what the framers said), but data acquired through the ACS has proven invaluable in the housing and community development field in understanding local markets.
Unbelievable, huh? The New York Times neatly captured its incredulity in a May 13 op-ed:
"This is know-nothingness at a new level."
Indeed. The ACS provides annual economic, demographic, and housing data and helps businesses decide where to build, assess consumer spending habits, and determine hiring practices.
While the the move will likely face its demise in the Senate, it's a good time to step back and look at just how this data is used. Recently, we asked some prominent housing experts to identify trusted data sources when determining the heath and trends concerning local real estate markets. Not surprisingly, the census data gathered from the ACS was one of those sources.
So, let's hear from you: how would this affect your work?
Post a comment
What’s the CDC Model?
Posted by Matthew Brian Hersh on May 9, 2012
No one expects that a one-size-fits-all definition for community development or a blueprint model for effective CD is attainable—it must be tailored to the needs of individual communities. But are there basic rules we can follow for effective CD? We've tracked this discussion for several years—see our 2009 article, A 21st Century Vision for Community Development where Joe Kriesberg, executive director of the Massachusetts Alliance of Community Development Corporations looked at how CD would need to change in the next generation.
CD often refers to place-rooted nonprofit organizations working at the scale of neighborhoods or sets of neighborhoods to reverse disinvestment and spark revitalization, with a heavy reliance on real estate development, especially housing, as a tool to achieve those ends. But in our weekly survey last week, we asked you, and, as expected, we received a an array of responses. Several responders, while supportive of CD ideals, were critical of the housing production model. Here's a sampling:
"Yes, there is a model. At a basic level it involves people working together on a cooperative basis to improve communities. However, the term is often used to describe top-down efforts to improve the economic climate in communities, improve housing stock, or increase the capacity of individuals and organizations to engage in certain types of community change efforts. The grass-roots "bottom up" approach often described in the community organizing literature 40 or 50 years ago has been lost—in favor of well-funded government or privately driven efforts to tell low and working class people what's good for them." —Donna H., California
Continued... · Post a comment
Preserving History with Neighborhood Character
Posted by David Holtzman on May 8, 2012
Driving through Virginia's Hanover County the other day, I was struck by how much history has imprinted itself on the landscape. I drove by the Hanover Courthouse, where Patrick Henry argued against the English king's right to impose his will on the colonists. The courthouse is still used for trials today. Then I went past a log house where the Confederate Gen. Stonewall Jackson asked the homeowner for a drink of water on his way to battle. A few miles down the road is the farm where Secretariat, winner of horse racing's Triple Crown, was raised.
With all this history embedded in the landscape, it is odd that history often tends to get short shrift when big decisions are made in this state regarding historical buildings and places. In many cases there is little discussion in the media or in public meetings about the relative value of saving civic buildings that are in disrepair, but which have immense significance in the recent life of the communities they served. At the same time, I have noticed that very few new houses built in this region do much to honor the architectural traditions that were dominant here in the 17th, 18th and 19th centuries.
These trends may be true in other states and regions, as well. In Virginia, at least, I imagine there are some people who would say that it is better to turn our backs on the past. After all, not everyone agrees that it is worth commemorating the exploits of men like Stonewall Jackson, since they fought to preserve slavery. Or that it is worth saving a high school that was originally built to serve blacks, since they could not attend the white schools.
Continued... · Post a comment
Reconnecting Shared Visions to Investment Opportunities
Posted by Stephanie Allewalt on May 7, 2012
Recently, over two sizable cups of locally-roasted coffee, a colleague and I mulled over a simple question: "How can we continue to make our city more livable?" True, this is a simple question with a complex set of answers. But to urban advocates, postulating solutions to the question tends to be an invigorating way to start the morning.
Picture us: two professionals at a Milwaukee coffee roastery with different backgrounds who share a common goal: the increased livability of the city they love. One generally looks to new construction as a defining benchmark in measuring improved livability, while the other to rehabilitation of the existing urban environment. My colleague’s keen interest in development and city planning led to fluidly-delivered ideas for enhancing the city’s core. He outlined strategies for financing, development options, and new high-rises. I wistfully injected anecdotes on reinvestment and renovation potential, broader definitions of "return on investment," and thoughts on historic preservation vis-à-vis economic development.
Over the past several months I have observed an apparent disconnect in Milwaukee between our thoughtfully-researched visions (i.e. our "plans") and our daily dialogues on investment decisions. But when we know what remarkable investment decisions can result when dedicated citizens and engaged members of the business community connect deeply with shared visions of their city’s future, how can we reintroduce our recorded visions as the framework upon which others can brainstorm, and implement, complementary ideas? How can we return to the notion of using plans as the centerpieces of discussions on improving American cities?
Continued... · Post a comment
What’s Next in Arts & Economic Development
Posted by Michael Hickey on May 6, 2012
There’s something you should know about me: I’m a professional amateur. For the past seven years I’ve been co-writing and performing in original works of musical theater with my wife’s theater company, Downtown Art. We’ve just opened our latest piece, Bowery Wars (Part 2), a rock musical about the history of the Lower East Side 100 years ago, Tammany Hall politics, gang warfare, and Romeo & Juliet. It rocks, and yes you should come see it.
But I’m not just here to flog my latest masterpiece. We professional amateurs are artists who fly under the radar. We don’t make our livelihood from our art. We do other things to put bread and butter together. I happen to be a highly compensated community develop consultant, but many of my peers are dog walkers, administrative assistants, massage therapists, and restaurant workers. (By the way, in another shameless plug, you should check out my brother Dan’s blog on the lives of restaurant workers and artists in Chicago). I also serve on the Naturally Occurring Cultural Districts Working Group, and I’m currently doing some research for the Municipal Art Society on revenue trends for the nonprofit cultural sector. I’m my previous work I ran an “Arts and Economic Development” giving strategy from the Deutsche Bank Americas Foundation along with my colleagues Gary, Alessandra and Sam (hi guys!).
All in all, you might say I have a rather engaged perspective on the question of where arts and economic development intersect, and where they don’t. There are four major trends right now in NYC.
Continued... · Post a comment
Trending: #HousingExtendedFamily
Posted by Richard Layman on May 3, 2012
Unemployment and other economic reversals have led to adult children to come back home to live with their parents, increasing housing size and reducing demand for housing: (see NPR's "One Roof, Three Generations, Many Decisions") even as the number of singleton households continues to rise ("More singles living alone and loving it, despite the economy" from USA Today). This is a leading cause of the continued weakness in the housing market.
As David Smith of Recap Real Estate Advisors and the Affordable Housing Institute said in his Guru column, "What should we be preserving?," last June:
"Last year, for the first time in 50 years, American average household size rose, to perhaps 2.65 people. With 307,000,000 Americans, households of 2.59 people need 118,500,000 dwellings, whereas households of 2.65 people need 115,850,000 dwellings. At a demographic stroke, this means reduced effective demand for 2,650,000 homes – more than two years’ total national housing production.
Where did the households go? Back into hibernation, by doubling and tripling up or moving back home – today roughly 30% of all young adults live with their parents, and for one principal reason: jobs. They can't afford to be independent.
Housing fails if communities fail, and communities fail if jobs fail."
Continued... · Post a comment
How Are the AG Settlement Funds Being Used?
Posted by Matthew Brian Hersh on May 1, 2012
Enterprise Community Partners has issued a new report on what all 50 states are doing with funds received from the national mortgage settlement. It's a comprehensive filing, but acknowledges that while some states offer pinpoint appropriation plans, others include abiguities that leave open the door to divert funds to non-housing projects:
"The settlement documents provide a description of what the states intend to do with the funds. Some state descriptions are very specific, while others are vague. Nonetheless, these descriptions provide the first insights into how this $2.5 billion will be spent. Despite some states diverting funds for non-housing needs, housing advocates are encouraged that, for the most part, the funds will be spent on housing- related activities."
At its annual conference last month the National Community Reinvestment Coalition addressed this issue on a panel featuring Joseph Smith, North Carolina's longtime banking commissioner who now serves as monitor for the settlement. "Is there concern that money would be funneled into infrastructure projects? Yes. People worked hard to reach this agreement and this has to do with real people suffering and for this money to go to another source doesn't feel fair at all.
Mark Morial, a former mayor of New Orleans and current president of the National Urban League was a little more blunt:
"In some cases, state AGs have never been near a housing program. I think our message should be that he AGs should follow the message and the spirit of a settlement that was about housing. This is not about asphalt, not about planting trees.
The response is mixed and the analysis of the settlement is vast. The funds are a drop in the hat when you look at $700 billion in negative home equity since the housing crisis took hold, but that familiar caveat is always important to note: It's a start.
Rooflines file photo.
Post a comment
It’s All FHA’s Fault!
Posted by Matthew Brian Hersh on April 27, 2012
While we're used to seeing articles that blame the homeowner for some part of the housing crisis, some of the articles that come over the transom give us pause for their angle. This gem from Reuters, under the banner of an "Insight," did just that:
"More than 1 million Americans who have taken out mortgages in the past two years now owe more on their loans than their homes are worth, and Federal Housing Administration loans that require only a tiny down payment are partly to blame."
OK, so it's the homeowners' fault. We've heard that before, but then there's financial analyst Gary Shilling's assessment: "This is creating a new wave of underwater borrowers... We have all three branches of government trying to keep people in four bedroom houses who can't afford chicken coops."
Four-bedroom houses! It's as if Shilling thinks such things amount to luxury rather than necessity.
Here's how we'd rewrite the article's deck:
More than 1 million Americans who have taken out mortgages in the past two years now owe more on their loans than their homes are worth, and two-thirds of them are non-Federal Housing Administration loans. Looks like non-regulated mortgage brokers are at it again.
And that's the truth.
National Housing Institute
